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Editorial Commentary / Opinion

 

 

 

VenEconomy : Living on illusions
and killing with disillusionment

 

 

There’s many a slip twixt cup and lip, particularly in today’s Venezuela where the government is noted for its downright brazenness when it comes to lying and manipulating the truth.

While this loathsome practice of deceit by the powers that be is commonplace in all endeavors undertaken by the VenezuelanState, it is particularly evident in the oil industry.

The lies start when the authorities swear blind that PDVSA is producing 3 million b/d, when in fact it is producing just over 2 million b/d.

The stretching of the truth is such that new concessions in the Orinoco Oil Belt are announced with a tremendous fanfare, only to have the much publicized bidding on the Carabobo Block postponed for the nth time; never mind the open secret that the government has been importing gasoline for some time now owing to the deterioration of the country’s refineries. Equally lamentable or even worse is what is happening with the development of natural gas.

Before commenting on the present state of gas production, it should be noted that most natural gas in Venezuela is intimately linked with the production of oil. In other words, it is associated gas that is obtained when oil is brought to the surface. Or to put it more graphically, it’s like the gas bubbles that appear when you open a bottle of Coca Cola.

That said, it should also be remembered that, according to the Sow Oil Plan 2006-2013, gas production is supposed to reach 12.57 billion cubic feet per day by 2013, so turning Venezuela into a natural gas exporter. Three years after announcing the plan and with nearly three years to go to the target year, according to some analysts, production remains stagnant at some 5 billion cubic feet per day, about the same as in 2005 when the plan was made public and more than 2 billion cubic feet a day less than the government claims is being produced.

With the drop in oil production, Venezuela does not have enough gas to meet its basic needs. At the moment, the deficit is apparently in the order of 1.5 billion cubic feet a day. This gas deficit is even bigger than the oil deficit, owing to the fact that a large part of the gas produced has to be reinjected in order to be able to continue extracting oil.

Venezuela has non-associated gas deposits, i.e. deposits that do not depend on the production of oil. But the problem is that the two developments for producing this type of gas are on hold: there is a 15-year delay on the Mariscal de Sucre Project (formerly Cristóbal Colón), and the Deltana Platform Project has been on the drawing board for the past ten years. While the non-associated gas is there, it will be many years before the country can count on that production.

The government has also announced, with much delight, a series of projects based on fictitious amounts of gas available, among them: the Pharaonic gas pipeline that would go from Venezuela to Argentina; the Vehicle Gas Program; an ambitious petrochemical development; and several electrification projects using combined cycle gas turbines. The fact is that none of them is viable because they all require gas and, as mentioned earlier, today, there is no gas in Venezuela.

In short, this is simply further proof that all this spouting off at the mouth has nothing to back it up and is only fed by illusions that bring nothing but disillusionment and are pushing the country into bankruptcy.

 

VenEconomy has been a Venezuela's leading specialized publisher on financial, political and economic data since 1982. VenEconomy's Points of View on the issues of the day, as seen by VenEconomy during the last week. Petroleumworld does not necessarily share these views.

Editor's Note: This commentary was originally published by VeneEconomy on 07/29/2009. Petroleumworld reprint this article in the interest of our readers .

Editor's Note: All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld.

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Petroleumworld News 07/31/09

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