PDVSA to Start Building US$100mn Gas Pipeline in June

Venezuela's state oil firm PDVSA will start building a US$100mn natural gas pipeline in June 2006 to provide a long-term solution to Nueva Esparta state's electricity woes, José del Carmen Millan, president of the state's electricity and gas service regulator Megane, told BNamericas.

The gas would come from onshore and offshore oil and gas fields in eastern Venezuela including the onshore Yucal Placer field operated by the Ypergas joint venture in northern Guárico state, Millan said.

French company Total and its partners acquired a 35-year concession for the Yucal gas fields in June 2001. Total owns 69.5% of the concession: other partners are Spain's Repsol-YPF (15%), Venezuela's Inepetrol (10.2%) and Otepi (5.3%).

Nueva Esparta state private utility Seneca normally imports 60MW from the mainland via an underwater cable, but the line is in need of maintenance and operating at less than capacity. In addition Seneca's 226MW Luisa Caceres de Arizmendi diesel-fired plant is operating at less than capacity due to the fact that three of its turbines are offline for repairs.

Nueva Esparta is home to the tourist haven of Margarita Island, one of the Caribbean's top destinations, but tourists and residents on the island have had to endure electricity rationing since early August expected to last at least until the end of September.

Seneca, which is owned by US company CMS Energy (NYSE: CMS), reported at the beginning of the northern hemisphere summer tourist season in early August an increase in demand of 21%, more than double the projected nationwide increase of 9% for 2005.

A recent agreement for state-owned integrated electricity firm Cadafe to install a 150MW diesel-fired generation project in Margarita is just a temporary solution to a serious problem, according to Millan. "All of this is just to gain some time until the gas pipeline comes to Margarita," he said. The pipeline "will greatly contribute to solving the problem."

All the thermal generation capacity in the state will be converted to burn natural gas as well as diesel, Millan said. This includes Seneca's Luisa Caceres de Arizmendi plant and a 3.5MW plant on sparsely inhabited Coche island.

The two new 75MW plants that Cadafe will build at El Guamache port will be able to run on both liquid fuels and natural gas, Millan said. The government of President Hugo Chávez is trying hard to promote tourism to Margarita and is also trying to promote use of the nation's plentiful gas reserves, some 150 trillion cubic feet or more.

The idea is for natural gas to substitute liquid fuels in industrial processes and power generation, allowing state oil firm PDVSA to export more fuel at high international prices.

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