According to Oil and Gas Journal, Venezuela had 171 trillion cubic feet (Tcf) of proven natural gas reserves in 2009, the second largest in the Western Hemisphere behind the United States. In 2006, the country produced and consumed 1 Tcf of natural gas. An estimated 90 percent of Venezuela’s natural gas reserves are associated, meaning that they occur along with oil reserves. According to Enagas, the principle government agency charged with regulating the natural gas sector, the petroleum industry consumes over 70 percent of Venezuela’s natural gas production, with the largest share of that consumption in the form of re-injection to aid crude oil extraction.

In 1999, Venezuela adopted the Gas Hydrocarbons Law, which opened all aspects of the natural gas sector to private investment. The goals of the law included the development of natural gas resources, especially non-associated fields; expansion of the domestic natural gas transport network, creation of a general distribution system; promotion of natural gas export projects; and increased consumption of natural gas by the power and petrochemical industries.

The Gas Hydrocarbons Law also allowed private operators to own 100 percent of non-associated projects, a sharp contrast to the ownership rules in the oil sector. Furthermore, royalty and income tax rates on non-associated natural gas projects are much lower than corresponding rates for oil projects. The law does give PdVSA the right to purchase a 35 percent stake in any project that moves into commercial status.

PdVSA produces the largest amount of natural gas in Venezuela. There is currently limited private participation in the sector. Repsol-YPF is the largest private natural gas producer in Venezuela. In September 2005, Repsol-YPF began production from the first stage of its Barrancas Block project, which contains an estimated 2-6 Tcf of natural gas reserves. The project integrates natural gas production and an 80-megawatt (MW) power station in Portuguesa. In April 2004, Total began first production in the Yucal Placer blocks, with an initial output of 100 million cubic feet per day (MMcf/d). Petrobras operates the Tinaco and San Carlos projects, while Argentina’s Pluspetrol is developing the Tiznado-Barbacoas field.

PdVSA awarded exploration blocks in 2003 in the Plataforma Deltana area, located off Venezuela’s northeast coast adjacent to the country’s maritime boundary with Trinidad and Tobago. Chevron began exploration in 2004 of the Loran field (Block 2), drilling three wells. The company also announced in June 2005 that it had drilled a successful exploratory well in its adjacent Lau-Lau field (Block 3). Statoil holds the exploration license for the Cocuina field (Block 4), along with equity partner Total. In 2008, Statoil completed its exploratory drilling program in Block 4, with industry reports indicating that it found commercially-viable quantities of natural gas.

In 2005, Russian natural gas company Gazprom won a tender to develop the first stage of the Rafael Urdaneta project. Following a seismic exploration program, Gazprom drilled its first exploratory well in late 2008 in the Urumaco-1 block. According to industry reports, commercial production from the area could begin in 2013. Other areas of interest for offshore natural gas exploration include the Mariscal Sucre project (north of the Paria Peninsula in Sucre state) and the Blanquilla-Tortuga fields (northwest of Isla Margarita). A large share of any future offshore natural gas production would likely supply proposed liquefied natural gas (LNG) projects (see below).

In recent years, Venezuela has improved its domestic natural gas transport network, to allow greater domestic utilization and movement of gas production. The Interconnection Centro Occidente (ICO) system connects the central and western parts of the country, making natural gas more easily available to domestic consumers and for re-injection into the western oil fields. Once all of the compression stations along the system are built, the ICO will have a capacity of 520 MMcf/d. In late 2008, the Venezuelan government announced that the ICO project was nearly completed, with some smaller sections of the system already in use.

In early 2008, the Antonio Ricaurte pipeline came online, connecting Venezuela with Colombia. Initially, the pipeline will allow Colombia to export natural gas from the Punta Ballenas area to western Venezuela, with contracted volumes ranging from 80-150 MMcf/d. However, current plans call for the flow of the pipeline to be reversed in 2012, with Venezuela exporting 140 MMcf/d of natural gas to Colombia.

In September 2008, Venezuela signed agreements to create three joint venture companies to pursue LNG projects along the northern coast of the country. Each project will consist of a separate liquefaction train at the Gran Mariscal de Ayacucho (Cigma) natural gas complex in Guiria. The first project would source gas from the Plataforma Deltana project, with exports estimated at 4.7 million tons per year (t/y). The second train would use natural gas from the Mariscal Sucre project, also exporting an estimated 4.7 million t/y. The third train would use natural gas from the Blanquilla-Tortuga fields. According to PdVSA, the total investment in the three projects could approach $20 billion, with first exports by 2013.

Proposed LNG Projects in Venezuela
Project Name	Source of Natural Gas	Foreign Partners	Export Volumes (million t/y)	Estimated Completion
Train 1	Plataforma Deltana	Galp, Chevron, Qatar Petroleum, Mitsubishi, Mitsui	4.7	2013
Train 2	Mariscal Sucre	Galp, Enarsa, Itochu, Mitsubishi, Mitsui	4.7	2013
Train 3	Blanquilla-Tortuga	Gazprom, Petronas, Eni, EDP	TBD	2016