Venezuela to Hike Natural Gas Price as It Cuts Back on Subsidies

(Bloomberg) -- Venezuela is preparing to significantly increase natural gas prices as it continues to phase out long-standing fuel subsidies in search for revenue.

The nation’s oil ministry plans to triple prices for the fuel, its first increase in more than a decade, after years of hyperinflation reduced the price to nearly nothing, according to people with knowledge of the matter. PDVSA declined to reply to a request for comment.

Businesses and factories that use gas to fuel furnaces, ovens, boilers and heaters will pay $3.3 per million British thermal units (Btu) from a previous price of $1.13 per million Btu, or $2.48 per cubic meter. This would be the government’s second planned fuel increase after announcing a hike in diesel prices for industrial purposes on July 6.

The government last meaningfully increased gasoline and diesel prices in 2020 after rolling back a decades-long policy of subsidies for drivers and public transportation that made Venezuela’s fuel one of the cheapest in the world. Despite sitting atop the world’s largest crude reserves, Venezuela’s refineries can’t meet domestic demand for fuel due to years of disinvestment, mismanagement and US sanctions.

As part of this new scheme, PDVSA’s gas affiliate reached out to mid-and-large-sized businesses to discuss new supply contracts, which will be tallied in U.S. dollars from now on, the people said.

PDVSA is the sole supplier of gas for heating and cooking in the country. It serves more than 89% of clients with propane, which is delivered in canisters. Less than 10% is served by natural gas, which is sent directly to households and businesses through pipelines.

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