Bloomberg News

Venezuela’s New Diesel-Fired Power Plants May Reduce Oil Exports

June 11, 2013

Venezuela, South America’s biggest oil exporter, is boosting power generation from petroleum products by about 10 percent as it seeks to end blackouts, potentially reducing shipments abroad.

Venezuela is adding about 1.2 gigawatt of diesel-fueled electricity capacity in 2013 to avoid another recession caused by drought, Electricity Minister Jesse Chacon said in an interview in Caracas today.

“Diesel is a short-term solution before we develop clean sources of energy and move thermal plants to natural gas,” said Chacon, who took office in April.

Falling oil production and rising sales to the local power sector are likely to reduce state-run Petroleos de Venezuela’s oil exports by about 200,000 barrels a day, Alejandro Grisanti and Alejandro Arreaza, New York-based analysts with Barclays Plc said in a note to clients yesterday. Oil provides 96 percent of Venezuela’s foreign earnings, which are used to import the majority of goods consumed in the South American nation.

In addition to thermal plants, the state power company known as Corpoelec is adding about 800 megawatts of new capacity from hydropower and wind, to bring total national installed capacity to around 30 gigawatts by the end of this year, Chacon added. The first turbine of the 2.2-gigawatt Tacoma hydropower plant will begin operations in July.

The ministry is complementing new generation projects with measures to moderate demand.

“No amount of new capacity will be enough if we don’t become efficient consumers,” he said.

Venezuela has the world’s cheapest electricity and Latin America’s highest per-capita electricity consumption, according to the ministry.

The government wants to reduce demand growth by about a third to 3 to 4 percent a year by overhauling prices and installing more meters, the minister said.

To contact the reporter on this story: Anatoly Kurmanaev in Caracas at akurmanaev1@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net


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