Venezuela Oil Expansion Stalls Amid Power Crisis

Venezuela's oil industry is facing significant challenges due to the country's unreliable power supply. Executives gathered at a recent energy conference in Caracas expressed concerns over the slow progress in clearing the biggest obstacle for their expansion projects: electricity.

The country has an unresolved electricity deficit of more than 1,500 megawatts (MW), leading to widespread power outages that last up to 10 hours per day. This affects not only households and businesses but also prevents children from attending school and people from working.

Despite a legal mandate approved in January for new projects 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 capture and use large volumes of gas for power generation, but none have started.

Venezuela's peak demand is approximately 16,000 MW, which experts say is not too high to solve with existing solutions. To rehabilitate and automate the country's power system, an estimated $5 billion investment is required, according to Sandra Conde, transport and gas director at the Development Bank of Latin America and the Caribbean (CAF).