Updated 11:31 AM EST, Sat, Nov 27, 2021

Venezuela Delays Gas Exports to Colombia - Here's Why

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Venezuela has halted natural gas exports to neighboring country, Colombia.

According to CNBC, the Venezuelan state oil company is halting gas exports across the border to Colombia due to climate factors, as well as the need to generate electricity. The Colombian Mining Ministry reported on Friday that Petroleos de Venezuela or PDVSA was notified that their supplies will be suspended because of "the behavior of electrical energy generation due to climatic variability." In other words, the current drought has been affecting the region.

Reuters said that the El Nino weather phenomena has already caused drought and water shortages across Colombia and around 70 percent of the country's energy has been supplied hydroelectrically.

CNBC noted that the US Energy Information Administration has previously said that Venezuela's enormous natural gas reserves come second only the the US in the Americas. However, it has been consuming more of the said gases than it has been producing, which is becoming a problem. On top of that, the country has also been trying to upgrade their infrastructures.

In terms of investments, Venezuela's development of the said fields has also been slow, despite their vast reserves in the Caribbean. This is due in part to the concerns of foreign firms about the unfavorable prices offered by the PDVSA.

Colombia and Venezuela have been in agreement since 2007 that the latter will send 39 million cubic feet of gas per day to the former, amounting to about three percent of Colombia's supply. Other than that, the EIA noted that part of the gas is also used to generate power, while about 35 percent is used by the petroleum industry to help production of mature fields.

Before this year, Colombia has been a key supplier of gas to Venezuela. This is because in 2007, South American countries inaugurated a 140-mile natural gas pipeline that could transport up to 150 million cubic feet of natural gas per day. Their agreement outlined Venezuela to import gas from Colombia for four to seven years, and will then reverse the flow in order for Venezuela to export gas with new projects that come online.

Venezuala has previously announced its intent to cut ties with gas imports with its neighbor. In June 2015, the PDVSA said that it will not renew its contract to import gas from Colombia and will instead tap local production to supply its region. Even then, the drought has always been a problem, with Colombia announcing that it reduced gas exports to Venezuela to ensure they will have enough fuel to run its own power plants.

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