Executives gathered in Caracas this week for the first large energy conference since Washington launched a $100 billion reconstruction effort for Venezuela’s oil industry are warning about slow progress to clear the biggest obstacle for their expansion projects: unreliable power.
With an unresolved electricity deficit of more than 1,500 megawatts (MW), the OPEC country’s long-standing power outages are getting worse as demand recovers, leaving households, shops and factories without power for hours every day.
Even after a legal mandate approved in January for new projects in the energy sector to generate their own electricity, many executives see no way to start or expand oil and gas developments if the government does not accelerate its plans to restore capacity and fix the deteriorated power grid.
Several companies have submitted projects to the government to capture and use large volumes of gas for power generation that is currently being flared. But none have started.
“The industry in general must face the challenge of recovering the power system,” said Claudio Villalobos, motion manager for Central America and the Caribbean of electrification and automation firm ABB, at the conference.
When asked how to tackle the problem, Hunter Hunt, chief executive of privately held US energy producer Hunt Energy Holdings, said he did not know, but added the country’s peak demand of about 16,000 MW is not so large as to make solutions impossible.
“I do think there’s a fundamental understanding in Venezuela that if we’re really going to see the resources here develop quickly, responsibly, environmentally, and to the benefit of the Venezuelan people, there needs to be a much more coordinated exercise here,” he said on Tuesday at the Venezuela International Oil & Gas Summit, referring to the power issues.
In regions severely hit by outages of up to 10 hours per day, protests and frustration are increasing as the lack of power prevents children from attending school, business owners from opening shops and people from working. Lack of air conditioning makes it difficult to sleep in the heat.
Venezuela’s electricity minister Rolando Alcala said late on Tuesday in an interview at state TV that key projects with companies including Eurobras, IMPSA, GE Vernova and Siemens Energy are progressing to restore hydroelectric and thermal generation.
By the end of the year, up to 4,800 MW would be back in service, according to a plan announced earlier this year by interim President Delcy Rodriguez.
After many unfulfilled promises, analysts and experts doubt the government’s ability to meet that goal, even after recently signed agreements with power providers and manufacturers.
Lawyer Juan Carlos Pro-Risquez from Dentons, who advises companies seeking to invest in Venezuela, echoed the need for power. “The challenge is important. Electricity must improve.”
(Reporting by Deisy Buitrago and Vivian Sequera; writing by Marianna Parraga)