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Market Plans

Venezuela Environmental Export Market Plan
Chapter 8

Market Overview

The market size for services is difficult to determine. However, based on projects currently on track or in the pipeline, the total investment in services for 1998 is estimated at $17 million, with U.S. sources contributing $5 million. The demand for environmental services is growing in all sectors as part of a renewed emphasis on environmental protection. This chapter covers several areas with opportunities for U.S. companies.

Institutional Development

Venezuela is receiving substantial funding to improve the institutional structure of its environmental sector. One major focus is the effort to shift control of water utilities from the federal government to state and municipal governments. For example, there is $71 million destined for HIDROLARA to improve system efficiency and increase payment rates. HIDROLARA is expected to serve as a model for other regional water systems. The World Bank and the U.S. Environmental Protection Agency (EPA) are negotiating the Environmental Management and Cartography program, which will provide $50 million to improve Venezuela's environmental regulatory and enforcement framework. The program should yield strong opportunities for U.S. companies expert in the development of such frameworks.

Hazardous Waste Planning

Expected modifications to Decree 2211 will encourage Venezuelan companies to take action to resolve hazardous waste storage and disposal problems. A lack of Venezuelan expertise on storage, treatment, and recycling options results in a strong opportunity for U.S. companies to develop and implement action plans. The discussions of modifications to Decree 2211 have already created a market for consulting services.

Feasibility Studies

Feasibility studies funded by the U.S. Trade and Development Agency (TDA) play a substantial role in providing service opportunities for U.S. firms. The most recent TDA-supported projects under way in Venezuela are:
Hazardous Waste Management: TDA is funding ($101,500) a feasibility study to evaluate a comprehensive hazardous waste management system at MARAVEN oil fields. Contractor selection is under way.
Oil Pit and Waste Storage Cleanup: TDA is funding ($540,000) a feasibility study to investigate cleanup options for a number of large waste oil pits and lagoons located near MARAVEN facilities. Contractor selection is under way.
CORPOVEN Environmental Projects: TDA funded ($200,000) a feasibility study for CORPOVEN’s refinery wastewater treatment projects. Contractor selection is under way and the International Environment Federation conducted a definitional mission. The report is available. (FY 96)
MARNR Remote Mapping Project: TDA funded ($600,000) a feasibility study on a CVG/Tecmin remote mapping project. Raytheon is conducting the feasibility study. Pacific Meridian conducted a desk study. (FY 96)
Isla Margarita Potable Water System: TDA funded ($125,000) a feasibility study on the up-grade of the potable water system at Isla Margarita. Contractor selection is under way. (FY 96)
MARAVEN Gas Recovery: TDA is funding ($375,000) a feasibility study on the recovery of low-pressure natural gas and hydrocarbon vapors at MARAVEN oil fields. Contractor selection is under way. (FY 97)
El Palito and Puerto La Cruz Industrial Wastewater Projects: TDA funded ($200,000) a feasibility study on industrial wastewater projects at El Palito and Puerto La Cruz. Contractor selection is being finalized. (FY 95)

Harza Engineering, a U.S. firm, has been doing business in Venezuela for 40 years. It provides civil engineering services for water quality management, hydroelectric power and dam projects, industrial waste disposal, and other land and water development projects. In December 1996, the Illinois company sold $42 million worth of water treatment equipment to Venezuela, backed by financing from the Export-Import Bank of the United States (Ex-Im Bank). This equipment will upgrade water treatment and pumping stations in the Caracas metropolitan area, and a waste treatment plant and water pumping station in the state of Sucre. This sale supported over 30 jobs at Harza and more than 600 jobs around the United States, while providing safe, clean water to 1 million Venezuelan citizens. Harza initiated a special procurement team a few years ago to manage Ex-Im Bank contracts. Since 1990, Ex-Im Bank and Harza have worked together on Venezuelan environmental projects that generated over $160 million in U.S. exports. According to a representative of the company, the two critical factors to pay attention to in Venezuela are the exchange rate risk and changes in taxation.

Other environmental-related feasibility studies carried out with TDA support in recent years include:

Residuum De-asphalting: TDA funded a $150,000 study of a heavy oil residuum de-asphalting project for MARAVEN. Fluor conducted the study. (FY 92)
Residuum Gasification: TDA funded a $100,000 study of a heavy oil residuum gasification project for MARAVEN. Fluor conducted the study. (FY 92)
Arrecifes Power Plant Rehabilitation: TDA funded a $400,000 study on a power plant rehabilitation project for Elecar. United Engineers and Constructors Inc. conducted the study. (FY 92)
Morrocoy Environmental: TDA funded a $450,000 study of the Morrocoy environmental project for the Ministry of Environment and Natural Resources. Bechtel conducted the study. (FY 92)
Advanced Weather Forecasting System: TDA partially funded ($175,000) a study of a severe weather forecasting system project for the Ministry of Environment and Renewable Natural Resources (MARNR). The Republic Group conducted the study. (FY 93)
Oil Pit Remediation: TDA partially funded ($250,000) a study for an oil pit remediation project for CORPOVEN. S.A. Engineering Science, Inc. completed the study, and a report is available in the TDA library. (FY 93)
Sidor Wastewater Treatment Project: TDA partially funded ($307,450) a wastewater treatment project at CVG Siderurgica del Orinoco, S.A. Chester Environmental conducted the study. (FY 94)
Tuy River Cleanup System: TDA funded a $2,500 study on the Tuy River cleanup project. The study was conducted by Millennium Science & Engineering. A report is available. (FY 96)
MARAVEN Environmental Projects: TDA funded ($23,400) a definitional mission on industrial waste projects. Global Environmental Operations, Inc. conducted the mission. A report is available in the TDA library. (FY 96)

Operations Contracts

Opportunities for environmental management are currently limited in Venezuela, but will increase gradually as the government shifts responsibility to local governments and private operators. Ex-emplifying this trend, the newly formed local water company, Aguas de Monagas, granted an operations contract to a private Spanish company. Other new water authorities will likely follow suit and award operations contracts to private companies. In the solid waste sector, there are potential opportunities for operation contracts in collection, landfill, and recycling center management.

Environmental Impact Statements

By law, all companies are required to analyze the impact on the environment that new facilities, expansions, or major operational changes may have. In practice, only the largest Venezuelan and multinational firms along with PDVSA follow this requirement.

All environmental impact statements (EIS’s) for new projects or expansions are submitted to the MARNR for approval. The MARNR is unlikely to reject any EIS but will often approve it with conditions. For example, the MARNR may require certain abatement equipment be installed or that a particular restoration effort be undertaken such as reforestation.

PDVSA’s operating subsidiaries (CORPOVEN, MARAVEN, and LAGOVEN) voluntarily perform an environmental impact study before exploring a new area. Environmental impact studies are also conducted for refineries and other petroleum and petrochemical facilities. Venezuelan firms and foreign companies involved in operational agreements for reactivation and operation of oil fields must also comply with EIS requirement. The typical PDVSA environmental impact study team consists of internal environmental conservation professionals and outside experts.

ISO 14000 adoption by Venezuelan companies, which will begin this year, will be a medium- to long-term impetus for environmental impact assessments and auditing services.

Venezuelan engineering and environmental consulting firms are advanced and dedicated to offering their services to the industrial sector. U.S. companies are often not price competitive for environmental consulting services. It is recommended that U.S. firms develop alliances with local consulting firms.

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