A few days ago, the President of Venezuela, Hugo Chávez, announced some good news from Madrid: the VenezuelanState had discovered a new gas field with potential reserves of 8 to 10 trillion cubic feet of original in situ natural gas in shallow waters off Falcón state. According to official sources, the discovery, made by Spain’s Repsol and Italy’s Eni, would put Venezuela among the ten countries in the world with largest natural gas reserves.
According to Repsol, the reserves found at Perla 1X well in Cardón IV Block are apparently equivalent to some 1.3 billion barrels of gas liquids. Undoubtedly, a discovery of this magnitude is an historical event for the country that gives rise to wild dreams of prosperity and development for the depressed Venezuela of today.
Voices are already to be heard in top government circles, such as that of the chairman of the National Assembly’s Energy and Mines Committee, Ángel Rodríguez, talking of the bounties that the discovery will have for the “country’s energy sovereignty” and for favoring “downstream diversity in terms of industrial development and the generation of jobs.” He has even suggested that the resources of Perla 1X “will grant greater security” and make it possible “to step up the development of the petrochemical industry,” not to mention that it could solve “the electricity problems the country is currently facing.”
But it would seem that not everything is rose colored in this episode of the country’s gas industry, at least in the opinion of some analysts, who question not only the size of the reserves but also their quality and the reliability of their certification.
In the opinion of Gustavo Coronel, a well-known oil industry geologist and a member of PDVSA’s first board of directors, this find should be taken seriously. However, he makes three observations, namely: 1) how is it possible to know the size of a gas field on the basis of a single well? 2) a considerable amount of work is required in order to define the size of the field, as just one well only “proves” the presence of gas in the immediately surrounding area; and 3) he also considers saying that an oil equivalence permits “estimating the find at 1.3 billion barrels” is an insult to anyone’s intelligence, as the characteristics of the gas are not known.
The oil expert Diego González Cruz is also cautious regarding the size of the announced reserves and the reliability of the certification. He says that a strict validation of the reserves that complies with international standards is required.
Should this find be confirmed, it would be equally important for the government to announce, responsibly and with plan in hand, what it intends to do with those resources.
This is a legitimate concern given the destruction to which the oil industry has been subjected during the 11 years this government has been in office. Because if the plans for the industry that were in place in 1999 had been continued, today PDVSA would be producing 6 million b/d and Venezuela would have true weight within OPEC.
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 09/15/2009. Petroleumworld reprint this article in the interest of our readers .
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