Venezuelan Government Engages in Natural Gas Agreement with Nigerian Business Entity

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August 11, 2024 (our website) - PDVSA, Venezuela's state oil company, has inked two deals with Nigerian firm Veneoranto to delve deeper into the investigation of offshore natural gas reserves. The agreements were formally signed at Miraflores Presidential Palace on Thursday.

Oil Minister Pedro Tellechea and Arthur Eze, Veneoranto's representative, put their signatures on these deals that will evaluate "technical-economic feasibility" of the Barracuda gas field in the Gulf of Venezuela and the Boca de Serpiente field in the Deltana Platform on the easternmost maritime border. According to Venezuelan authorities, these fields carry a combined 30 trillion cubic feet of natural gas. The aim is to certify the reserves, potentially propelling Venezuela to fourth place among the largest natural gas deposits globally, currently standing at 200 tcf.

These agreements also lay down conditions for the future issuance of gas exploration licenses. President Nicolás Maduro welcomed these new investments and reinforced his call for foreign collaboration in Venezuela's energy sector. He stated, "Venezuela is geared up for mutual respect and legal fairness to sign win-win contracts with private sector partners."

Maduro emphasized a rich portfolio of opportunities for international investors in the oil and gas sectors, expressing, "I am thrilled that the natural gas processes are speeding up. Soon enough, we will be exporting natural gas to Africa." Tellechea expressed his confidence in foreign investors, stating, "They trust the country, trust the industry, and will aid Venezuela in achieving economic growth and stability."

Veneoranto, a subsidiary of Atlas Oranto Petroleum, is a newly established African multinational corporation. Atlas Oranto's headquarters are in Abuja and its projects are currently operational in eleven African countries.

Venezuela has been luring private sector investment to reignite an industry hard-hit by U.S. sanctions. Since 2017, the US Treasury Department has enforced various financial sanctions, an export embargo, secondary sanctions, and other measures mainly targeting Venezuela's oil revenues.

Although the Maduro government has been boasting investment prospects in its chiefly unexplored natural gas reserves, the extent to which Veneoranto has sought or secured authorization from the Treasury Department remains unclear. In April, Washington reimposed crippling measures, following a six-month waiver permitting PDVSA to export crude freely. The US now requires companies to obtain authorization to engage with Venezuela—potentially subjecting them to secondary sanctions.

Venezuela recently struck two offshore gas deals with neighboring Trinidad and Tobago. In December, PDVSA issued a 30-year license for a project to explore the 4 tcf Dragon gas field jointly owned by Trinidad’s National Gas Company (NGC) and Royal Dutch Shell. Shell owns a 70 percent stake and will oversee the project. In July, PDVSA granted a 20-year permit for NGC and BP to explore the 1 tcf Cocuina-Manakin field which stretches between Venezuelan and Trinidadian waters. BP is expected to hold 80 percent of the shares, with Port of Spain and Caracas agreeing to a 66 to 34 percent share of the reserves.

These projects required Trinidad, Shell, and BP to secure US Treasury licenses to interact with the Maduro administration, with US officials attempting to ensure Venezuela receives no cash from these deals. In both cases, PDVSA does not hold stakes, with the Caribbean nation limited to taxes and royalties.

With the new Veneoranto deal, Venezuela gears up to explore additional natural gas resources, potentially facing ongoing challenges, including infrastructure constraints, political risk implicated by U.S. sanctions, and operational delays due to PDVSA's history of project delays. If successful, these collaborations could alleviate Venezuela’s chronic power shortages and provide new opportunities for both domestic use and export.

PDVSA, along with the Nigerian firm Veneoranto, will evaluate the technical-economic feasibility of two offshore gas fields, Barracuda and Boca de Serpiente, in Venezuela, with a combined 30 trillion cubic feet of natural gas.
By potentially propelling Venezuela to the fourth place among the largest natural gas deposits globally, these agreements could pave the way for Venezuela to export natural gas to Africa in the future.
Venezuela's Energy Minister, Pedro Tellechea, expressed confidence in foreign investors, stating they trust the country and the industry, and will aid Venezuela in achieving economic growth and stability.
President Maduro stressed the need for mutual respect and legal fairness in signing winning contracts with private sector partners, as he aims to attract more investments to the country's energy sector.
Veneoranto, a subsidiary of Atlas Oranto Petroleum, is actively seeking authorization from the U.S. Treasury Department for their association with Venezuela's offshore gas deals, given the ongoing U.S. sanctions against Venezuela, which could potentially subject them to secondary sanctions.