Benefits Offered by the Natural Gas Industry in Venezuela.
Venezuela is a country with abundant natural resources and enormous potential, the energy sector being the most prominent. The Caribbean nation possesses the world's largest proven reserves of heavy crude oil, with 303 billion barrels (January 2020). However, Venezuela also has one of the world's largest natural gas reserves, ranking eighth globally and first in Latin America, with proven reserves estimated at 195 to 201 trillion cubic feet (TCF). These reserves are concentrated primarily in the northern and offshore regions, with 81.20% being associated gas and 18.80% being non-associated gas.
Currently, a process is underway to certify blocks that could increase reserves, positioning the country as having the fourth largest reserves in the world.
It is important to note that the activities of searching for and exploring non-associated gaseous hydrocarbon deposits, as well as the collection, storage, and use of both non-associated natural gas from production and gas produced in association with oil or other fossil fuels, are governed by the Organic Law of Gaseous Hydrocarbons. This law also establishes that these activities can be carried out by the State directly or through entities owned by the State, or by private or foreign individuals, with or without State participation. In other words, the exploration, extraction, processing, transportation, and commercialization of gaseous hydrocarbons can be carried out by a private company without the need for State or State-owned enterprise participation.
With the General Licenses recently granted by OFAC, which allow direct investment without risk of sanctions in Venezuela's gaseous hydrocarbons sector, this sector has become very attractive to private investors. The potential is enormous, as Venezuela could potentially rank fourth in the world in terms of natural gas reserves. Currently, the gas industry in Venezuela has very low productivity levels considering its potential, but this translates into significant opportunities for investors, especially private ones, both domestic and foreign. The use of natural gas has increased worldwide due to its more environmentally friendly nature. Its current applications include electricity generation, heating, industry, transportation (CNG), and as a raw material for plastics, fertilizers, and chemical products, among others.
At Gandolphi & Seijas Abogados Asociados, we offer legal services for the formation of commercial companies, consortia, joint ventures, holding companies, and business groups, as well as specialized technical assistance for activities related to the exploration, production, transportation, storage, refining, and marketing of gaseous hydrocarbons. We also provide general legal and technical representation and advice.
