10 December 2010 21:46 [Source: ICIS news]
CARACAS (ICIS)--Uncertainties over power and natural gas supplies were among the costs of doing business in Venezuela for petrochemical companies this year, according to cables released on WikiLeaks.
In cables dated February 2010, a Mitsubishi official told US diplomatic sources that a shortage of natural gas was forcing state-owned PDVSA to “prioritise projects and slow-down or cancel projects in the pipeline”, the cables said
As of Friday, Mitsubishi had not immediately responded to a request for comment.
The official also said that Asdrubal Chavez, the vice minister of energy and petroleum for petrochemicals, was reportedly not honouring any natural gas commitments prior to his assumption of the post, according to the cables.
“Asdrubal Chavez …told another Japanese firm recently that any natural gas supply deal signed before he assumed his current position is invalid and that it was not in PDVSA’s interests,” the cable said.
That unnamed firm, according to the cable, had been working for several years to finalise an olefins project in Jose.
At the time, PDVSA officials were said to be “extremely upset” that there were no bids to develop the Mariscal Sucre offshore natural gas fields, prompting them to announce they would develop the field themselves, according to the cables.
Mitsubishi told PDVSA that the expected price for natural gas that participating companies would receive from Venezuela, at $1.25/million cubic foot, were too low, according to the cables. Local reports put the cost of developing the Mariscal Sucre field at over $8bn (€6bn).
The cables described the failed international tender as “a significant setback for PDVSA”.
The Mitsubishi official noted that his firm was also trying to confirm the supply of natural gas from PDVSA to Pequiven and its mixed enterprises in Jose, according to the cables.
Mitsubishi is a partner in two methanol plants with Metor at Jose.
In addition to natural gas concerns, Venezuela was experiencing widespread power outages because of a drought. According to the cables, the energy executive said that private sector petrochemical tenants had been given contradictory information regarding rationing measures.
An industry source confirmed that three generators were procured but that they were ultimately not used because of the belated start of the rainy season. The source further said its project at Jose has not experienced any problems with its natural gas contract.
Mitsubishi’s second facility, Metor II, with a production capacity of 850,000 tonnes/year, began operating over the summer as expected and has operated at full capacity since.
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