Ex-Shell exec who cut gas flaring in Iraq seeks to do the same in Venezuela

By Luc Cohen
PUNTA DE MATA, Venezuela March 5 (Reuters) - A former Royal
Dutch Shell executive who led its efforts to cut gas
flaring in Iraq a decade ago is planning a similar project in
another crisis-stricken OPEC nation: Venezuela.
Mounir Bouaziz, who left Shell last year and is now an
independent business developer, said he began talks last October
with Venezuelan state oil company PDVSA and the oil ministry,
but he acknowledged U.S. sanctions on PDVSA - designed to oust
socialist President Nicolas Maduro - were an obstacle.
Bouaziz oversaw Shell's efforts to reduce flaring in
southern Iraq after years of war left infrastructure in poor
shape. Venezuela is in a sixth year of economic crisis, leaving
PDVSA without resources to maintain gas facilities.
"It's the same story here in Venezuela," Bouaziz said in a
Feb. 28 interview in Caracas. "It's much easier to have that
experience than trying to reinvent the wheel."
Bouaziz hopes to raise private investment to repair damaged
processing plants to capture and use the gas, extracted
alongside crude oil, that Venezuela currently burns.
This kind of flaring takes place at oilfields around the
world without the infrastructure to process gas. Flaring
releases 300 million tonnes of climate-warming carbon dioxide a
year, according to the World Bank. That represents nearly 6% of
greenhouse gas emissions from oil and gas operations, according
to the International Energy Agency.
Venezuela flared or otherwise lost 3.4 billion cubic feet
per day (bcfd) of natural gas in 2019, up from 2 bcfd in 2010,
according to consultancy Gas Energy Latin America. That came
even as oil output fell 56% in that period to 1 million barrels
per day (bpd) in 2019.
Many gas processing plants - which help either reinject gas
into oilfields to maintain reservoir pressure or send it to
consumers - are damaged or outdated. That leads to flaring, but
also means less gas is reinjected, hindering oil output.
The problem is severe in eastern Monagas state, where the
Furrial and Punta de Mata light oil fields have a lot of
associated natural gas.
"There are too few plants, and those that are there do not
work," said Igor Miranda, who leads the Monagas chapter of the
Oil Chamber of services companies.
Bouaziz plans to start by fixing compressors needing a few
parts, which would cost tens of millions of dollars. He is in
talks with potential investors but declined to name them.
PDVSA cannot finance such a project itself due to tumbling
cash flow after years of mismanagement, corruption and falling
oil prices. Sanctions also block it from major lenders.
Bouaziz said the project would make money by selling
recovered gas to PDVSA's joint ventures with private oil
companies, which can reinject it, or domestic industrial
consumers.
To be sure, the talks are in early stages, and Bouaziz said
sanctions could spook investors and complicate imports of
replacement parts for U.S.-built equipment. He said he would be
transparent with international authorities and that the project
would bring social and economic benefits.
"We are seeking legal advice on how to deliver this project
while complying with any applicable sanctions," he said.
Neither PDVSA nor Venezuela's oil ministry responded to
requests for comment. Shell, which has a separate project with
PDVSA to reduce flaring in Monagas, declined to comment.
Neither the U.S. Treasury nor State Departments responded to
requests for comment on whether such a project may be permitted
under sanctions for social and environmental reasons.
Flared gas is a lost opportunity for Venezuela, where 90% of
citizens do not have direct gas in their homes and depend on
canisters of liquefied petroleum gas (LPG) to cook. Because of
problems at Venezuela's refineries, LPG has grown scarce,
forcing many to cook with wood - including those who live near
Furrial and Punta de Mata.
"It cannot be that in a gas-producing country we are in this
kind of decadence," said Franyarson Bravo, a 28-year-old street
vendor as he waited outside an LPG hub in nearby Maturin to try
to convince the manager to fill his canister.
If Venezuela's flared gas were sold at market prices it
would generate $1.5 billion per year, said Antero Alvarado, Gas
Energy's Venezuela director.


(Reporting by Luc Cohen in Punta de Mata and Caracas
Additional reporting by Maria de los Angeles in Puerto Ordaz;
Editing by Steve Orlofsky)