Overview

Venezuela holds the world’s second largest reserves of oil and eighth largest reserves of gas. The vast majority of the country’s reserves are to be found in the Orinoco oil belt. The oil is particularly heavy and sour, meaning it is difficult to recover. The majority of gas produced from these fields is subsequently re-injected to enhance oil recovery. This means there is limited gas available for domestic use, so much so that despite the country’s large reserves it imports gas from Colombia.

The re-election of President Hugo Chávez provides stability to the oil and gas industry and promised continuation of the policies aiming to increase production. There will be a number of new oil projects starting up in the Orinoco belt, producing both oil and associate gas. The majority of gas is to be used for re-injection and by the energy industry. To meet rising domestic demand for energy the development of the country’s non-associate gas fields have been made more attractive. Under the Socialist Gas Revolution policy of 2009, gas projects have been given more lenient contractual and fiscal terms.

This has attracted a number of international companies to conduct exploration and production activities in the blocks made available by the state oil company Petróleos de Venezuela. The giant La Perla field discovered by Repsol and Eni is set to begin production in 2013 and the Mariscal Sucre project will begin production from the Dragon field in December 2012. The available blocks have plenty of potential and there are fields waiting to be brought into production. It is expected, therefore, that Venezuela’s gas production will expand over the next decade.

Chávez suspended the country’s LNG ambitions in late 2011, to prioritise the domestic market. The country has been investing in its gas infrastructure to connect offshore fields to consumers and link the east and west networks with projects such as the Interconnection Centro Occidente system. Gas will be used to provide a reliable electricity supply, by the petrochemical industry and to substitute petroleum as a transport fuel.

Page updates: 13/12/2012