Venezuela Signs Gas Deals with Shell, Eni and Repsol Despite Infrastructure Collapse and Political Uncertainty

Venezuela holds the eighth-largest natural gas reserves globally and in South America, totaling 196 trillion cubic feet or the equivalent of 32.66 billion barrels of oil, representing 3.3 percent of global reserves as of 2020. Approximately 60 percent of this gas is associated with oil deposits while 40 percent exists as free gas. Despite this resource wealth, the country ranks ninth in Latin America for electricity generation from natural gas, trailing nations without domestic gas supplies including Dominican Republic and Chile.

Energy consultant Tito Bonadona from the Venezuelan Association of Gas Processors cautioned that development timelines extend from 18 to 36 months before monetization begins, meaning economic benefits will not appear immediately. The projects involve restarting initiatives originally named Cristóbal Colón and Mariscal Sucre in the eastern region. No investment capital has arrived yet from the newly announced agreements.

Electricity generation from natural gas combustion collapsed from 31,068 gigawatt-hours in 2017 to just 3,688 GWh in 2023, according to the International Energy Agency, paralleling the worsening blackouts and power rationing affecting the country. Thermoelectric plants designed to serve western population centers and the Andean region remain largely paralyzed. Simultaneously, households face shortages of LPG cooking gas cylinders while petrochemical facilities under the collapsed Pequiven group stand idle.

Venezuela ranks as Latin America’s third-largest source of CO2 greenhouse gas emissions from gas flaring, behind industrial powers Brazil and Argentina, despite minimal gas utilization for electricity. Much of the country’s gas production is either reinjected into oil wells to facilitate crude pumping or wastefully burned in flares. The country produces natural gas primarily as a byproduct of oil extraction but fails to capture its value, with abandoned processing capacity contrasting sharply with domestic energy scarcity. The revival of decades-old gas projects depends on attracting financing and maintaining political stability through a transitional government period.