Archive for February 7th, 2011

PDVSA’s gas plans, just more hot air

February 7, 2011

El Nacional has an article today about PDVSA’s natural gas plans in the 2007-2013 Development Plan. Like all of the “plans” by the revolution, it hasn’t worked out very well. What I had no clue about about was how badly it was going.

The plan was grandiose: “The gasification project is a social service considered strategic to improve the quality of life of the population, because it assigns the greatest contribution in happiness to the most humble sectors of the country”

Last year, the plan was relaunched, because up to now only 1% of the homes targeted had been supplied with natural gas to the home using pipelines. Only 20,000 homes of the 2 million planned now can say they have the service.

What’s the problem? Well, basically everything. The project called for investment of US$ 2.3 billion, however, roughly only US$ 580 million of this has been disbursed so far. Moreover, this budget is being revised, because steel pipes and labor have gone up due to both inflation and devaluation. The article notes that in Colombia, a similar plan gave 4 million people access to direct natural gas and it took 10 years to do it.

But it is not only a matter of building the infrastructure, with the fall of oil production, there is still a shortage of natural gas in the country. PDVSA emphasized the distribution of gas bottles, taking over 60% of the distribution from the private sector. But the lack of natural gas for the bottles has increased delivery from three days to 21 days. (An employee at work spend a full day in order to insure he gets a bottle)

The consequence? People buy electric burners for their homes, not only increasing consumption, but adding to the strain in a sector that has also been critical for the last two years.

The solution? Expropriate more gas bottle companies, sign an agreement with Belarus, announce that you will accelerate the program.

In the end, just more hot air…