Repsol Finds Gas, Chavez Puts On A Show 

It was a happy coincidence that the very day Hugo Chavez went to visit the King of Spain he happened to run into Repsol’s president Antonio Brufau in a downtown Madrid bookstore. Surprised to see Chavez Mr. Brufau told him about a wonderful find the company had just made in the Gulf of Venezuela, something President Chavez did not know yet.

“We found enough gas in the Gulf of Venezuela to supply Spain for five years, Mr. President”, said Brufau. 

“Wow, Brufau”, said Chavez. “And what are we going to do with all that gas”?

“We will think of something”, replied Brufau, and added: “the deposit is more than 240 meters thick and about 30 square kilometers in size. We were expecting three trillion cubic feet of reserves and we might have up to 10 trillion cubic feet, the equivalent of more than three billion barrels of oil”.

“Wow…Antonio”. Said Chavez. “This will make us second to Russia, if not bigger than Russia in gas reserves (…wait until I call Lula)”.

After this serendipitous encounter with the president of Repsol Chavez went to see the King and notified him of the find. Of course, the King was very pleased and reaffirmed the ties of friendship and collaboration existing between the two countries.

The day after Repsol’s shares had gained much value and Chavez was basking in attention. A few things about the gas find, however, are still in the dark. For example:

• How can the company talk about 240 meters of “pay” in the reservoir if there is only one well drilled?
• Is the reservoir rock sandstone? There are no 240 meters thick bodies of sandstone in the Falcon basin. Maybe they are talking about a reef limestone development, something similar to the beautiful San Luis limestone that outcrops south of Coro.This could be a very good reservoir, but the limestone is usually below thousands of feet of younger sands and shales. We ask: what is the nature of the reservoir rock? I it a reef limestone? 
• How can Repsol claim that the size of the trap is 30 square kilometers and the porosity of the rock 20 percent, having drilled a single well? Aren’t they a bit audacious? The size of the potential reservoir can be estimated by the use of geophysical data but the continuous character of the reservoir cannot be determined unless much more drilling is done.
• How can Brufau talk about more than 3 billion barrels of oil equivalent if the company has not yet run production tests? They don’t know what the nature of the gas is.

The whole treatment of the find by Chavez and Repsol has been highly irresponsible and politicized, especially keeping in mind that the activity is in the Gulf of Venezuela, where bitter controversy exists about limits between Colombia and Venezuela.

I suspect that Chavez is being driven by a desire to magnify the find in order to enhance Venezuela’s importance as a gas “giant”. He erroneously said that Venezuela would only be second to Russia in gas reserves (far from the truth). Since he also competes with Lula for political leadership in Latin America, Brazil’s recent hydrocarbons find had increased his complex of inferiority. Therefore he grabbed this opportunity to milk it to the extreme.

In Chavez’s Venezuela most things related to oil are not geological but ideological.

Gustavo Coronel, a 28-year oil industry veteran, was a member of the first board of directors of Petroleos de Venezuela (PDVSA) and is the author of several books.