Introduction

Following agreement between governments of Islamic Republic of Iran and Bolivarian Republic of Venezuela regarding increase of the level of bilateral cooperation and commercial relations the following agreements were signed between Petropars Ltd. and Petróleos de Venezuela, S.A..

1. Ayacucho block 7 for quantification studies of reservoir and possible investment for development and operation of field in case commercially feasible.
2. Ayacucho blocks 1 & 2 for reservoir quantification studies
3. Ayacucho blocks 3 & 4 for reservoir quantification studies
4. North of Paria for management and engineering services.
5. Cardon II Gas field for reservoir quantification studies and possible investment for development and operation of field in case commercially feasible.

Orinoco Oil Belt

Faja area (Orinoco Oil Belt) in south east Venezuela has an extension of about 55000 km2.  At the moment about 11000 km2 is under exploitation activities with participation of international oil companies worldwide.  The Original Oil in Place of the total area is estimated to be 1360 MMMBLS. The area has been divided to 4 areas: "BOYACÁ", "JUNIN", "AYACUCHO" and "CARABOBO" and into 27 blocks.

Map for the New Geopolitical Vision of the Orinoco Oil Belt

Ayacucho Block 7 Quantification & Certification studies:

• Information Validation,
• Preliminary Models Generation.

• Reservoir Static and Dynamic Models preparation and simulation.
• Technologies Selection for production and upgrading of extra heavy oil.

• Reserves Certification.

The first phase of joint quantification studies commenced in first week of February 2006 and was completed in the third week of June 2006 according to the schedule and results were accepted by PDVSA. The start of second phase "Stratigraphic" wells drilling coincided with the visit of His Excellency president Ahmadinjad to Venezuela.  In a special ceremony on 18 September 2006 in Ayacucho block 7 area, His Excellency president Ahmadinjad and His Excellency president Hugo Chavez inaugurated the start of the drilling.  In August 2007 drilling of 13 wells in Ayacucho block 7 has been completed and drilling of 3 remained wells is scheduled for future.  First part of 3rd phase including static modeling preparation was started on 10 September 2007 by cooperation of PPL and PDVSA and completed on late November 2007.  Then, PPL/PDVSA started the second part of 3rd phase including reservoir dynamic modeling and simulation Quantification and certification of heavy oil in Ayacucho Block 7 including evaluation of available information and providing static and dynamic reservoir models according to the schedule in 4 pre defined phases was successfully completed in March 2008 and certified by third party hired by PDVSA and the OOIP was reported to Venezuela Ministry of Energy and Petroleum and PDVSA President.  Then, according to the Joint Study Agreement signed between PPL and   CVP for developing cooperation of Petropars Ltd. in this field, the joint working groups between Petropars Ltd. and PDVSA were formed. The joint working teams in technical issues prepared the preliminary production files and plan for developing the field.  Preparation of   economic model and business plan for development and operation of the field as well contractual negotiations is in the agenda of both PPL and PDVSA joint working groups.

PPL and CVP have signed an agreement for quantification activities of Ayacucho blocks 1 & 2.  The first phase of which started in early August 2006 at PDVSA's facilities at INTEVEP and completed according to the schedule in early 2007.

An agreement was also signed by PPL and CVP for quantification of the reservoirs existing in Ayacucho blocks 3,4 on 13 January 2007.  Studies started on May 2007 and according to the schedule completed in February 2008.

North of Paria, Mariscal Sucre

PPL is providing management and technical services to CVP for the of North of Paria offshore development project.  Based on PPL's experience in development of South Pars Gas field phases 1 and 4 to 8 in Persian Gulf, experts from PPL have been seconded to project organization for provision of management and technical services in development of the North Paria offshore field as per project management request.

The agreement for the joint execution of the study for the quantification of the gas reservoir existing in the "Cardon II" block of Rafael Urdaneta, was signed on 30 July 2006.  Seismic operations in the said block completed on December 2007.  According to the meetings with PDVSA process of seismic information will be completed till the end of 2008 and interpretation will be started in early 2009 and is scheduled to be completed till the mid of 2009.  Having sufficient information, drilling of exploration well will be scheduled for 2010.

Joint Companies

Two agreements regarding joint activities resulting in formation of companies between PPL and CVP have been signed:

2. Local (Venezuelan) mixed company for development of Ayacucho block 7.
According to Hydrocarbon law in Venezuela, preliminary plan for development and, the business plan of Ayacucho Block 7 for establishment of Mixed Company should be approved by Ministry of Energy and Petroleum of Venezuela and the Venezuela Parliament (NA). The review of bylaws and other legal documents of Mixed Company to be incorporated in Venezuela for development and production activities in heavy oil Ayacucho 7 field is in PPL/CVP working groups agenda.

Petropars Venezuela Branch

Petropars Venezuela branch was registered in Venezuela in 2006 to develop the business activities of company in Venezuela and acts as liaison office for all activities related to oil and gas industries value chain in Latin America.

Address: No. 8, Floor 8, Eurobuilding Professional Center, Guairita Ave., Chuao, Caracas, Venezuela

Postal Code: 1060

Tel/Fax:          +58 (212) 993 7497                    +58 (212) 993 5528