In June 2001, PdVSA held its first non-associated natural gas licensing round for 11 exploration blocks, of which it awarded six. A consortium led by Total won the Yucal Placer Norte and Sur blocks, with other blocks awarded to Repsol-YPF, Pluspetrol, and Petrobras. In April 2004, Total began first production in the Yucal Placer blocks, with an initial output of 100 million cubic feet per day (MMcf/d). Through later stages of the project, Total planned to bring output up to 300 MMcf/d. The Yucal Placer blocks contain an estimated 1-2 Tcf of natural gas reserves. Repsol-YPF announced In December 2004 that it had made a gas discovery in the Barrancas Block, in southwest Venezuela, which contains an estimated 2-6 Tcf of natural gas reserves. The first phase of the project, scheduled for completion in late 2005, will feed an 80-MW power station in Portuguesa, with a second stage to supply a 450-MW power station in Obispos by the end of 2006.

PdVSA has traditionally monopolized Venezuelan natural gas production. However, in the late 1990s, the Venezuelan government began to emphasize the opening and development of the natural gas sector. In 1999, the country adopted the Gas Hydrocarbons Law, which opened all aspects of the sector to private investment. The goals of the law included the development of natural gas resources, especially non-associated fields; expansion of domestic natural gas transport network and creation of a general distribution system; promotion of natural gas export projects; and increased consumption of natural gas by the power and petrochemical industries. The Gas Hydrocarbons Law also allowed private operators to own 100 percent of non-associated projects, a sharp contrast to the ownership rules in the oil sector. Furthermore, royalty and income tax rates on non-associated natural gas projects, 20 percent and 30 percent, respectively are much lower than corresponding rates for oil projects.

PdVSA awarded exploration blocks to Chevron and Statoil in 2003 in the Plataforma Deltana area, located off Venezuelas northeast coast adjacent to the countrys maritime boundary with Trinidad and Tobago. PdVSA estimates that Plataforma Deltana contains 40 Tcf of natural gas reserves. Chevron began exploration in 2004 of the Loran field (Block 2), drilling three wells. The company also announced in June 2005 that it had drilled a successful exploratory well in its adjacent Lau-Lau field (Block 3) that tested at 51 Mmcf/d. Statoil holds the exploration license for the Cocuina field (Block 4), and the company has contracted an exploratory rig for the field for 2005. However, the company ceased drilling in June 2005 due to safety concerns about the drilling equipment; as part of its license for the block, Statoil has agreed to drill at least three exploratory wells in four years. PdVSA has had difficulty attracting interest in the remaining two blocks of Plataforma Deltana. It has twice offered Block 5, with no takers. The company has been in negotiations with BP over Block 1, also known as El Dorado, but there have been no firm commitments. Greater development of Plataforma Deltana will likely depend upon cooperation with Trinidad and Tobago, which already has sizable production activities in its adjacent territorial waters. BP would like to develop El Dorado in conjunction with its nearby Cassia B platform in Trinidad and Tobago, which currently has spare capacity. Venezuela and Trinidad and Tobago began negotiations in 2004 to delineate cross-border reserves. In March 2005, the two countries signed a memorandum of understanding to export Venezuelan natural gas via Trinidad and Tobagos Atlantic LNG facility. On the other hand, Trinidad and Tobago refused to join Venezuelas Petrocaribe initiative in 2005. PdVSA held its latest natural gas licensing round in 2005. The round, dubbed the Rafael Urdaneta project, covered offshore acreage in the Gulf of Venezuela adjacent to Falcon state, with estimated reserves of 25 Tcf. PdVSA established the end of September as a deadline for companies to bid on six blocks. PdVSA plans to hold future licensing rounds for addition offshore exploratory blocks, including Blanquilla (10 Tcf of estimated reserves), Carupano (16 Tcf), and Bonaire (6 Tcf).