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Venezuela’s oil industry is at risk of grinding to a halt, along with the rest of the nation, as El Guri, Venezuela’s largest hydroelectric power facility, could see a drop in output of 3,800 megawatts if eight of 18 turbines are shut down.
That would be roughly a quarter of the power produced in the country. Since the national electric grid powers the oil industry from oil wells, to refineries, natural gas processing plants and marine terminals, loss of power from Guri would be crippling. This situation is highly possible if reservoir levels keep falling. The government appears to have no immediate solutions and instead talks of lofty goals on converting its diesel-run power plants to be fueled by natural gas. The Guri dam was at 242.88 meters at the end of April and shutdowns would begin if it reaches 240 meters. While it has started to rain recently and forecasts for a few centimeters of rainfall over the month provide a bit of a cushion, it may not be enough. “Average drawdowns on reservoir levels for May are normally around 6.4 cm — considering current savings due to power rationing are at around 20%, it is going to be really touch and go whether they make it through May,” FGE analyst Thomas Olney said. Rather than developing shorter term solutions like expanding existing infrastructure and capacity in its diesel-run power plants and taking advantage of falling global gasoil demand, the government announced plans to convert its diesel-driven power plants to run on natural gas. Energy Minister Eulogio Del Pino estimated they would be able to export 500,000 b/d more diesel rather than use that to run power plants. Venezuela needs to export more oil products in order to increase its foreign currency earnings as not only is the country short water, it has a severe fiscal crisis that may get worse if it can’t meet multi-billion dollar bond payments coming up over October and November. But the feasibility of such a plan is a big question mark. “When Del Pino [talks of] that replacing 500,000 b/d of oil products, he does not say that it would require additional gas production of 2,900 Mcf/d… which PDVSA is far from doing,” said Venezuelan consultant Einstein Millan. Natural gas to the rescue? Venezuela certainly has the natural gas resources to run its power grid with the second largest reserves in the Americas behind the US of 196 Tcf, according to the US’ Energy Information Administration. The questio...