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Venezuela Certifies Natural Gas Reserve, Discovers Coltan Reserve

Mérida, October 16th 2009 (Venezuelanalysis.com) - Venezuela certified its largest reserve of natural gas this week and announced the discovery of new deposits of coltan, a key mineral for electronics manufacturing.

The announcements follow the government's recent ratification of a public investment plan to boost domestic manufacturing, including the production of cell phones and natural gas-powered vehicles.

The reserve of eight trillion cubic feet of natural gas off the coast of Falcon state was discovered last July, and underwent nearly three months of testing for certification by the Venezuelan state oil company PDVSA, Italy's ENI, and Spain's Repsol. Named "Perla 1X," it is the largest single reserve of natural gas to be certified in Venezuela.

The government estimates that there are 200 trillion cubic feet of natural gas along the Venezuelan coastline. In November 2008, PDVSA and Russia's Gazprom began jointly drilling for gas in the Gulf of Venezuela.

Meanwhile, a "large reserve" of coltan was discovered to the south of Venezuela's largest oil reserve, the Orinoco Oil Belt.

"Now a strategic mineral called coltan appeared," said Chavez. "We still do not know the quantity of reserves that we have of coltan, but according to the information we have received, it is a large reserve," he said.

The National Guard has taken control of the area surrounding the reserve to protect it from smugglers, because "they were taking the coltan to Colombia as contraband, exploiting it illegally," the president explained.

In addition to the coltan, the government has also discovered deposits of diamonds, phosphates, titanium, lead, uranium, and gold so far this year. Venezuela's gold reserves are now the second largest in the world after South Africa's, and are worth $100 billion, according to the minister for basic industries and mining, Rodolfo Sanz.

The recent discoveries coincide with a public investment plan for 2010 that includes a special fund to boost Venezuela's manufacturing sector, and a fine on banks that do not commit at least 10% of their credit to national industry.

According to the minister for intermediate industries, science, and technology, Jesse Chacon, the government aspires to use the country's natural resources domestically, "for the benefit of Venezuelans," rather than selling them as raw materials to be manufactured by countries such as France or the United States.

Venezuela began producing its own cell phones earlier this year, and hopes to hopes to produce nearly half a million phones in a state-owned factory called Venezuelan Telecommunications in 2010.

To grow its automobile sector, Venezuela also plans to begin producing natural gas-powered cars as part of a mixed enterprise between Venezuelan and Argentine firms. The government already implemented a quota last April that aims to have half of all automobiles manufactured and sold in Venezuela be equipped with dual natural gas and gasoline powered engines by 2011.

In a meeting with his Council of Ministers on Thursday, President Chavez emphasized the need to save energy by promoting energy consciousness in the population and developing alternatives to oil as an energy source.

"We must create a campaign right now, because the increasing consumption continues to shoot upward and it does not correspond to the growth of the population or of the national economy," Chavez told his ministers.

The president then proposed a policy solution. "We are going to create an instrument, a resolution: Those who use energy beyond a maximum amount, we'll apply a surcharge, so they'll pay more. Those who use less, lower than a minimum amount, we'll subsidize them, we'll limit their rates," Chavez explained.

2010 Budget Proposal

Venezuelan Finance Minister Ali Rodriguez is scheduled to present the details of the Ministry's national budget proposal for the year 2010 to the National Assembly (AN) next Tuesday.

On Thursday, the president of the AN Finance Committee, Legislator Ricardo Sanguino, outlined some basic tenets of the budget proposal.

"It should be emphasized that the resources allocated to health, housing, food, social security, and the missions are completely guaranteed," said Sanguino, assuring the continuation of the national government's policy of maintaining social spending throughout the world economic crisis.

The Finance Ministry's proposal would largely leave the budget the same as it has been since the Chavez administration made a series of adjustments last March to cope with the drop in oil prices due to the world economic downturn.

The proposed budget would be based on an estimated average price of $40 per barrel of oil, and a daily national oil production of 3.1 million barrels, with 2.6 of those barrels being exported. Overall spending would increase from the current 156.4 billion bolivars ($72.7 billion) to 160 billion bolivars ($74.4 billion), and the official exchange rate would be maintained at 2.15 bolivars to the dollar, where it has been since 2004.

Also, the Finance Ministry predicts that overall GDP growth will be .5% and inflation will be between 20-22% in 2010, according to Sanguino.

Published on Oct 16th 2009 at 6.34pm