VENEZUELA - The Gas Priority.

One of the top priorities for Caracas is to increase the supply of natural gas at top speed. Repsol/YPF of Spain is prominent among companies receiving special price incentives for increased supply of gas it is producing in the country (see Gas Market Trends No. 19). PDVSA is spending $1.3 bn in 2005-07 on new natural gas projects. These include the east-west gas pipeline connection, the Jose 250 plan to increase NGL production and expansion of the country's gas hub at Anaco.

Increased gas output at Anaco is being pumped to western Venezuela through the connecting pipeline. The pipeline link, known as ICO, has been under construction since April 2004. Its first 70-km phase is supplying the Paraguana refining complex with gas from the Cumarebo and La Vela fields in the western state of Falcon. This phase can carry up to 100 MCF/d of additional gas and was completed earlier this year. The second 230-km phase will raise the pipeline's capacity to 520 MCF/d and will link the facilities in Falcon with the petrochemical complex at Moron, which is connected to Venezuela's eastern gas pipeline network fed by the hub at Anaco. The Jose 250 project will take NGL production in the eastern state of Anzoategui from around 160,000 b/d to 250,000 b/d.

The Anaco expansion in Anzoategui is already underway and will raise gas output from 1.75 BCF/d to 2.4 BCF/d in 2006. Anaco's increased capacity will supply heavy industries in south-eastern region of Guayana region, PDVSA[acute accent]s heavy oil and petrochemical complex in Jose, near Puerto La Cruz in Anzoategui, and residential users in eastern and central Venezuela.