Colombia To Continue Exporting Gas To Venezuela Until Mid-2.014

Colombia, alongside U.S.-based Chevron Corp. (CVX), has agreed to continue exporting natural gas to energy-rich neighbor Venezuela for two-and-a-half years more, as part of a deal that began in 2.008.

Colombia's national oil company, Ecopetrol (ECOPETROL.BO), and Chevron jointly operate a field in Colombia's northern La Guajira region, near Venezuela, which has been sending gas to needy western Venezuela for four years.

The agreement for Colombia to continue selling natural gas to Venezuela until mid-2.014 also included contractual adjustments that will eventually oblige Venezuela to export gas to Colombia, Ecopetrol said in a statement sent late Thursday.

Gas exports were 50 million cubic feet per day when the program began but have continued to increase. 

This year, Ecopetrol and Chevron sent around 185 million cubic feet of gas per day. 

Though boasting one of the world's largest gas reserves at around 195 trillion cubic feet, Venezuela has been slow in developing projects and the resulting insufficient domestic supply has led the country to import gas to meet its power needs. 

Some critics attribute the project delays to red tape and regulatory uncertainty emanating from President Hugo Chavez's government.

The gas from Colombia is sent through a 225-kilometer pipeline built and operated by Venezuela's state-owned energy firm Petroleos de Venezuela, or PdVSA, which connects the La Guajira field with Maracaibo city.

The contract with Ecopetrol, Chevron and PdVSA initially called for exports to reverse in January 2.012. 

Using the same pipeline, PdVSA would export gas to Colombia for 16 years in a sort of payback for the time Colombia exported to Venezuela during a time of need.

But PdVSA has fallen behind schedule in its plans to build pipelines that can deliver the gas in east-to-western Venezuela, and then on to Colombia. 

Part of the problem is also that Venezuela, which is among the world's top oil exporters, injects much of its natural gas reserves into its oil reservoirs, which increases pressure and keeps production flowing at steady rates.

Colombian officials have said meeting domestic needs would be top priority if there is a local shortage, and that it would reduce or halt gas sales to Venezuela.

Last week, PdVSA signed a contract to purchase gas from Italy's Eni SpA (E, ENI.MI) and Spain's Repsol YPF SA (REP.MC, REPYY) and allowing for development of Venezuela's massive offshore Perla gas field. 

Around 300 million cubic feet of gas per day is expected to be produced at the site by 2.013 in a bid to satisfy domestic demand, according to Venezuelan Oil Minister Rafael Ramirez. In subsequent development phases, Perla is seen producing as much as 1.2 billion cubic feet per day and officials from PdVSA, Eni and Repsol say they expect to negotiate way to export the commodity.