PdVSA to freeze LNG export projects

Sep 28, 2011 12:00 AM

Venezuela is freezing its liquefied natural gas export projects due to falling prices over recent years that make investments uneconomical, state oil company PdVSA said.
The OPEC nation sits on some of the world's largest gas reserves, which the government says amount to more than 195 tcf. But it has yet to begin producing any commercial gas and instead imports supplies from Colombia. Fears of rule changes in Venezuela, where President Hugo Chavez has nationalized most of the oil industry, and pricing issues have meant that PdVSA has struggled to attract investment from foreign companies with the right experience.

Anton Castillo, director of PdVSA Gas, told Venezuela's offshore gas projects would now focus on feeding growing local demand for natural gas -- as opposed to creating LNG for the export market.
"(The gas) will be destined for the internal market and not for export," he said at an oil conference in Puerto La Cruz. "It is a question of economics. Gas prices have fallen a lot, and very high levels of investment are needed."

The decision affects the giant offshore Mariscal Sucre project, estimated at 14.7 tcf and being developed by PdVSA, and the Plataforma Deltana field, where Chevron was given the go-ahead last year to begin gas extraction by 2013. Also last year, the government said PdVSA, Spain's Repsol and Italy's ENI had found reserves of 15 tcf at the Cardon 4 offshore block further west.
Chevron said it had not received notification from Venezuela about changes to its Plataforma Deltana license, but would work with PdVSA if there were any modifications.

"The license for Plataforma Deltana says Chevron and the partners would supply our gas to LNG plants, so we really have to follow the contract," Don Stelling, president of Chevron's Latin America business, told in Puerto La Cruz.
"If our customers, PdVSA, instruct us to do something different, we will happily work with them to try to maximize the value for the country, Venezuela, and Chevron."

The decision unveiled also implies more delays to the Gran Mariscal de Ayacucho Industrial Complex (CIGMA), an ambitious LNG project that has mostly been on hold for almost a decade. Nearby in the region, Peru and neighbouring Trinidad and Tobago both boast large LNG facilities.
Asked about the possibility of Chevron sending gas to Trinidad and Tobago for processing, Stelling said: "A lot of different alternatives have been looked at, but again, we are waiting until PdVSA provide us with the direction. We can't really pick the direction we need without PdVSA."

Venezuela suffered an electricity crisis last year, triggered in part by a severe drought that slashed hydropower production. That put a renewed emphasis on developing the country's natural gas reserves to help meet growing demand.
To meet all the needs of its industry, Castillo said, Venezuela needed about 500 mm cfpd. It is currently importing some 200 mm cf from neighbouring Colombia, although another PdVSA official said that it hoped to stop those imports in 2014.

Alexander's Commentary

Change of face - change of phase

In the period of July 20 till August 3, 2015, Alexander will be out of the office and the site will not or only irreg

read more ...
« August 2019 »
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 31

Register to announce Your Event

View All Events