BP, Loran, and why Venezuela won't recover the way you think

The field holds an estimated 4 trillion cubic feet of recoverable gas resources.

This is worth paying attention to. Not just as an energy deal, but as a signal about how Venezuela's recovery might actually unfold.

Loran is a good example of something I've been thinking about for a while. Shell is already in Phase 1. And the design routes part of that gas through Trinidad, where Atlantic LNG infrastructure already exists. That means production can move forward without waiting for Venezuela to first rebuild its entire electrical, industrial and logistics system.

And Venezuela's power situation is severe. The country has less than 13,000 MW available out of 36,000 MW installed, nearly 90% of thermal capacity is offline, and the system depends on hydropower for over 80% of its generation.

The energy industry can recover faster than the grid around it

You could end up with sophisticated offshore projects producing and growing, LNG flowing out through Trinidad, and international operators running things, while Maracaibo, Valencia or even parts of Caracas still struggle with power outages. That's probably what Venezuela's recovery is going to look like.

Because on top of that, oil and gas reactivation itself consumes electricity. Production, compression, pumping, refineries, terminals, water, petrochemicals. Everything adds load to a system that's already in deficit. The very electrical deterioration is already affecting oil production and refining.

That's why I increasingly think we'll see something like a parallel electrical economy forming around key assets. I'm talking about on-site gas generation, engines, turbines, microgrids, dedicated feeders, private storage and contracts that start making a lot more sense. Reuters already reported that Repsol was sourcing equipment to supply its own power plants.

And gas gets particularly interesting because it has two destinations that can compete with each other. On one side, Venezuelan gas feeds Trinidad and Atlantic LNG. Cocuina-Manakin, for instance, is designed to send 70% of its output to Atlantic LNG. On the other side, Venezuela desperately needs to bring its thermal generation back online.

At some point the tension becomes real: is that molecule worth more converted into LNG for export, or converted into electricity inside Venezuela to enable more production, industry and reconstruction? The answer will probably be both, depending on the field and the contract.

Venezuela cannot afford a sequential recovery

I no longer think Venezuela can afford a sequential recovery. There just isn't time.

Stabilizing the power system alone was estimated at a minimum of $15 billion over three years, assuming financing, payment guarantees, contracts, transmission and execution all fall into place. And there's an additional global constraint: critical electrical equipment has lead times of several years. Some step-up transformers already exceed 160-week delivery windows. Money helps, but money can't manufacture three years of time.

So here's how I see it playing out over the next 3 to 7 years: investments concentrate around oil, gas, ports, petrochemicals, water and specific industrial zones, with reliable infrastructure that can operate at least partially off the national grid. And over time, those systems start connecting into a rehabilitated national network.

It's not a clean or equitable process. There's a real risk of ending up with world-class petroleum facilities surrounded by communities with mediocre electricity. That carries economic, social and political consequences.

But physically speaking, it seems far more likely than waiting for a complete, centralized reconstruction of Corpoelec before the rest of Venezuela can move forward.

Some pieces of Venezuela are becoming investable before Venezuela itself is.

Recovery from the nodes outward

And that points to something unusual: Venezuela's reconstruction might happen from the nodes outward, not from the national system inward. Offshore gas in the east. Oil in the west. Ports. Petrochemicals. Dedicated generation. Industrial corridors. Then interconnection.

Behind all of this sits a broader hemispheric story: Trinidad needs gas, Guyana is converting gas into electricity, Suriname is figuring out how to monetize its resources, Texas and Louisiana need enormous amounts of energy, AI is putting pressure on power generation and equipment demand, and Gulf disruptions are increasing the value of having alternatives.

Venezuela is not going to solve its power crisis first and then leverage its resources. It will probably have to use its resources, especially gas, to build around the energy crisis, while rebuilding the national system over the course of years.

BP and Loran is one of the first large pieces that makes that idea stop being purely theoretical.