Venezuelan government signs natural gas contract with Nigerian company

Caracas, August 11, 2024 (venezuelanalysis.com) – Venezuela’s state-owned oil company PDVSA has signed two agreements with Nigerian company Veneoranto to advance the exploration of offshore natural gas reserves.

The ceremony took place on Thursday at the Miraflores presidential palace. Venezuelan Oil Minister Pedro Tellechea and Veneoranto representative Arthur Eze signed contracts to study the “technical-economic feasibility” of the Barracuda gas field in the Gulf of Venezuela in the west of the country and the Boca de Serpiente field on the Deltana platform on the easternmost maritime border.

According to Venezuelan authorities, the two fields contain a total of 30 trillion cubic feet (tcf) of natural gas. The aim of the agreements is to certify the reserves, which could potentially make Venezuela the fourth largest natural gas reserve in the world. Currently, 200 tcf are certified.

Venezuelan state media added that the agreements would set the conditions for the future awarding of gas extraction licenses.

Venezuelan President Nicolás Maduro welcomed the new investments and reiterated his call for foreign partners to get involved in the Caribbean country’s energy sector.

“Venezuela is well prepared to conclude win-win agreements with private sector partners in terms of mutual respect and legal fairness,” he said during a televised address. The Venezuelan president highlighted a portfolio of opportunities for international investors in the oil and gas sector.

“I am happy that the natural gas processes are being accelerated,” Maduro added. “Soon we will be exporting natural gas to Africa.”

For his part, Tellechea stressed that foreign investors “trust the country and industry and will help Venezuela continue to achieve economic growth and stability.”

Veneoranto is a newly formed subsidiary of Atlas Oranto Petroleum, a Nigerian multinational owned by Eze, one of Africa’s richest entrepreneurs. Headquartered in Abuja, Atlas Oranto currently has projects in 11 African countries, according to its LinkedIn profile.

Venezuela has courted private investment to boost an energy industry that has been hit hard by U.S. sanctions. Since 2017, the U.S. Treasury Department has imposed financial sanctions, an export embargo, secondary sanctions and a range of other measures aimed primarily at curbing the South American country’s oil revenues.

In April, Washington reimposed sweeping coercive measures after PDVSA had been allowed to export crude oil unhindered for six months. The US requires companies to obtain authorization to do business with Venezuela, otherwise they face secondary sanctions. It is currently unknown whether Atlas Oranto has sought or received the green light from the Treasury Department.

The Maduro government has particularly touted the investment opportunities in the country’s largely unexplored natural gas reserves. While Venezuelan law requires PDVSA to hold a majority stake in joint ventures in the oil sector, there is a legal loophole that removes this requirement for gaseous hydrocarbon projects, meaning private companies can hold virtually all of the shares.

Venezuela recently signed two offshore gas contracts with neighboring Trinidad and Tobago.

In December, PDVSA granted a 30-year license for a project to explore the 4 trillion cubic foot Dragon field in Venezuelan waters, which is jointly owned by Trinidad’s National Gas Company (NGC) and Royal Dutch Shell, the latter of which owns a 70 percent stake and will manage operations.

In July, PDVSA granted NGC and BP a 20-year permit to explore the 1 trillion cubic foot Cocuina-Manakin field, which stretches between Venezuelan and Trinidadian waters. BP will reportedly hold an 80 percent stake. Port of Spain and Caracas agreed to split the reserves 66 percent to 34 percent.

Trinidad, Shell and BP had to secure licenses from the US Treasury Department to negotiate with the Maduro government, with US authorities trying to prevent Venezuela from receiving any money from the deals. In both cases, PDVSA owns no shares, and the Caribbean state is limited to taxes and royalties.