Venezuela struggles to plug natural gas deficit

Venezuela hopes to supply Latin America with its vast natural gas reserves through a transcontinental grid, but the country is just beginning to take steps to resolve a domestic deficit of the fuel that has dogged oil operations for years.

This weekend, President Hugo Chavez and his counterparts from Colombia and Panama celebrated the start of a 225- kilometer gas pipeline that will start supplying Venezuela’s Western oil fields with Colombian gas by next March. The $335 million pipeline underscores Venezuela’s newfound enthusiasm for natural gas as well the urgent need for the fuel.
“All these gas pipeline projects are strange, because Venezuela does not have enough gas (production) to fill them,” said Miguel Octavio, an analyst with Caracas-based brokerage BBO Servicios Financieros.

PdVSA needs the gas not only for existing oil operations, but to power expansion plans at the vast Orinoco heavy oil basin, in which the country hopes to double output over the next six years.

Market Watch