The Venezuelan Coal Sector

Venezuela remains highly dependent on oil revenues, which account for roughly 80% of export earnings, more than 50% of the federal budget revenues and around 30% of GDP. In 2007, the government announced plans for a nationalisation programme covering oil field, telecoms, electricity and banking as part of Chavez’s pre-election promise that ‘everything that was privatised will be nationalised’. In 2009, the government inaugurated its National Railway Development Plan to develop 15 lines and cover 8,500 miles by 2030. However, this is unlikely to boost the coal sector, which, following nationalisation, has effectively stalled. Exports are now capped at 10 Mt and foreign companies are leaving the country in droves.

Venezuela is also home to the Western Hemisphere’s largest conventional proven oil reserves, at 172.3 billion barrels at the end of 2009. This is second only to Saudi Arabia, which reported oil reserves of 264.1 billion barrels. Therefore, coal is not significant to the domestic economy.

Venezuela’s high oil and gas reserves contribute 74% of total primary energy consumption. Coal provides less than 1%.
While Venezuela’s coal production is relatively low, it is the third-largest net coal exporter in the Western Hemisphere due to its low domestic consumption.

Venezuela has recoverable coal reserves of 479 million tonnes (Mt), most of which is bituminous. Venezuela is the second largest producer of coal in Latin America, after Colombia. Coal production in 2009 amounted to five Mt, almost all of which was exported to other countries in the region, eastern US, and Europe. Domestic coal consumption is negligible. No coal-fired power plants are in operation in the country; neither are they likely to be installed before 2020.

The Guasaré Basin, near the Colombian border, is the major coal-producing region in Venezuela. Coal production has been limited during the last several years by infrastructure and transportation constraints. In April 1999, the government announced its intentions to increase production of high-quality coal to 21 Mt per year by 2008. Venezuela’s coal sector is dominated by Carbozulia, which is owned by PdVSA. Although Venezuela will never be a big player in this market, its hitherto untapped development potential is nevertheless substantial and of growing interest to European and North American consumers in particular. One obstacle to the speedy development of coal exporting is the inadequate infrastructure, with a lack of efficient rail links from the exporting mines to the deep- water ports and facilities for handling capsize freighters.

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