Mexico City, Mexico, July 25, 2023 (venezuelanalysis.com) – Venezuelan Oil Minister Pedro Tellechea announced Friday that the country is in advanced negotiations with foreign firms to develop its natural gas reserves. The announcement comes as Venezuela seeks to increase its productive capacity after years of under-investment as a result of US sanctions.
“Our goal is to explore, produce, refine and export every product we can,” said Tellechea during an address at a business chamber expo.
The Venezuelan oil minister added that he expects the country to finally hit the 1 million barrel per day benchmark this year, a goal that has eluded the state-owned oil company PDVSA in the recent term. Officials reported that the country was producing approximately 735,000 barrels per day (bpd) in June, the highest registered since early 2020. Tellechea claimed Friday that figure had increased to 831,000 bpd.
Upon taking office, Tellechea quickly ordered the temporary suspension of all oil export contracts following corruption allegations involving PDVSA that led to a string of arrests and the resignations of senior officials, including his predecessor, Tareck El Aissami. Tellechea claimed that the country presently no longer has any suspended contracts.
Under severe US sanctions, the Caribbean nation’s oil industry has been plagued by unreliable intermediaries that have seen the new leadership overhaul contracts and demand upfront payments. PDVSA has nonetheless maintained its productive operations, with Tellechea stating Friday that the oil company would continue to press forward despite the ongoing anti-corruption drive.
As a result of US-led sanctions aimed at starving the government of revenue, President Nicolás Maduro has sought to stabilize the economy via the liberalization of segments of the economy. Sanctions have also left Venezuela without access to financial markets and the capital to develop its natural gas reserves. Tellechea said PDVSA was in talks to extend gas licenses with Italy’s Eni, Spain’s Repsol and France’s Maurel & Prom.
“We must become a natural gas exporter,” he said.
In May 2022, Eni and Repsol received licenses from the US Treasury Department to restart their Venezuela oil operations. The following May, Venezuela granted a license to Repsol and Eni to export natural gas liquids from their jointly-owned Cardón IV offshore project. Natural gas extraction offers potentially more favorable arrangements for foreign corporations than joint oil ventures since there is no requirement that PDVSA hold a majority stake.
Any new deal with foreign firms would likewise need to receive approval from Washington in order to remain in compliance with US sanctions on Venezuela. US officials have maintained that they would not issue more licenses until there is progress at the negotiating table between the Venezuelan government and the hardline opposition.
The Mexico City-based talks have been suspended for months as parties wait for the release of money for a US$3 billion social fund drawn from various Venezuelan seized assets to invest in education, healthcare and infrastructure repairs. The money remains inaccessible despite commitments from US officials to release the funds.
Venezuela currently counts on the world’s eighth-largest proven natural gas reserves. Tellechea said a contract for the quantification of gas reserves would be signed in the coming days. The certification process of off-shore deposits could see the country rise to fourth place in proven gas reserves. Maduro has stated that the South American nation is ready to meet Europe’s natural gas demands.
Venezuela is reportedly in discussions with the European Union to implement a $1.5 billion project aimed at capturing methane emissions, using funds from the EU’s Global Gateway Initiative. This initiative was one of the major topics of discussion at the recent EU-CELAC Summit held last week in Brussels. Venezuela is also in talks with Trinidad and Tobago to jointly develop an offshore gas field.
Edited by Ricardo Vaz in Caracas.