If converting flare gas into electricity is such an obvious solution, why hasn't it already happened?
It is a fair question. The technology to capture flare gas and generate electricity has existed for decades. Around the world, oil producers have long used associated gas to power operations, communities, and industrial facilities. Yet in Venezuela—a country that simultaneously suffers from chronic electricity shortages and extensive gas flaring—the opportunity has remained largely unrealized.
The answer is that while the technology is not new, the conditions that make projects commercially viable have changed.
Historically, Venezuela presented a difficult environment for investment in flare-gas utilization. Electricity prices were heavily subsidized, making it difficult to justify the capital required to capture and process gas. Investors faced uncertainty regarding contracts, payment reliability, currency controls, and regulatory stability. International sanctions added another layer of complexity, limiting access to financing, equipment, and project development. Even when the economics appeared attractive on paper, the risks often outweighed the potential rewards.
As a result, flare gas was viewed primarily as an environmental issue rather than an economic opportunity.
Today, several important developments are beginning to change that equation.
First, Venezuela's electricity crisis has become impossible to ignore. Reliable power is now recognized as one of the significant constraint to economic recovery. Without electricity the country can’t function. Factories cannot operate efficiently, telecommunications systems become unreliable, businesses struggle to function, and new investment becomes difficult to attract. Energy has moved from being a sector issue to a national development priority.
Second, recent policy changes requiring oil companies to provide their own electricity have fundamentally altered the dynamics. Rather than relying on an overstressed national grid, operators now have a direct economic interest in producing power close to where energy resources already exist. And in most cases.
Third, carbon markets have matured significantly. Projects that reduce flaring and methane emissions may now qualify for carbon-credit revenues, creating an additional source of value that did not exist at scale a decade ago. What was once viewed as waste can increasingly be monetized.
Fourth, technology has improved. Modern modular gas engines, mobile generation systems, and distributed power solutions can often be deployed faster and at lower cost than traditional utility-scale infrastructure. Projects that once required years to develop can now be implemented in a matter of months.
Most importantly, the conversation itself has changed. Increasingly, people are realizing that Venezuela's electricity challenge won’t be fixed by the grid anytime soon. The attention is turning to distributed generation, localized energy systems, and solutions that can be deployed quickly while larger infrastructure investments are planned and executed.
In that context, flare gas begins to look less like a liability and more like a strategic asset.
The opportunity is not without challenges. Commercial structures, regulatory clarity, financing mechanisms, and operational partnerships will all need to be developed. Yet many of the barriers that prevented flare-gas projects from moving forward in the past are evolving, while the need for new sources of electricity has never been greater.
For investors, policymakers, and energy companies alike, the question may no longer be whether flare gas can help address Venezuela's electricity shortage. The more important question is whether the conditions have finally aligned to make it economically compelling. For the first time in many years, the answer may be yes.
The irony is difficult to ignore: while the country struggles with electricity shortages, it is simultaneously wasting a fuel resource capable of generating substantial amounts of power.
NOTE: The Electrification Project is seeking to assemble an advisory board of those interested or expertise in gas flaring. Send a brief note to [email protected]
VZ Economics Premium Subscribers get access to related content, background information and intelligence:
Sub Report on Gas Flaring. A compilation of articles about the subject and a growing database of key players involved in the space. Satellite imagery of the gas flaring sites in Venezuela.
Profile. World Bank Global Flaring and Methane Reduction Partnership (GFMR)
Profiles of Global Financial Entities.
+ Inter-American Development Bank
+ CAF Development Bank of Latin America and the Caribbean
+ International Finance Corporation (IFC)
Profiles on Industrial Enterprises:
+ INNIO Jenbacher
+ Aggreko
+ Baker Hughes
