Venezuela Certifies Natural Gas Reserve, Discovers Coltan Reserve

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.
President Hugo Chavez in a meeting with his Council of Ministers (ABN)

Mérida, October 16th 2009
( – 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

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

"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

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

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

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

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.