Withdrawal of foreign companies opens the way for new oil partners in Venezuela

The withdrawal of foreign companies from the joint ventures headed by the state-owned Petróleos de Venezuela is a fertile field for the arrival of new partners of the government of Nicolás Maduro, specialists in the area consider.

At least 15 foreign firms have sold or transferred their shares within the joint venture model of the Venezuelan oil industry and no longer have a presence in the sector’s projects in the South American country, according to the Reuters agency.

Among them are the French TotalEnergies, the Norwegian Equinor and the Japanese Inpex, which, according to the four sources cited by Reuters in its report last Thursday, agreed to leave the joint ventures “as long as they renounce the payment of pending debts and unpaid dividends” by Petróleos de Venezuela.

TotalEnergies assured in July of last year that the company disposed of 30.32% of its shares in Petrocedeño, in the Orinoco Belt, in the east of the country, in exchange for “a symbolic amount” as part of its compensation, which finally represented “an exceptional equity loss of 1,380 million dollars” in its financial balance.

The Reuters report comes a month after it was revealed that PDVSA had taken over 100% of an oil project known as Petrozamora. GPB Global Resources, a private company founded by former officials of the Russian state Gazprom, sold 40% of its shares in those energy operations in the western region of Zulia.

The oil business of the last years of the government of Hugo Chávez and of the nine years of that of Nicolás Maduro is based on a model of joint ventures, where the Venezuelan State assumes most of the actions and the singing voice in each project.

The recent changes in the ecosystem of the oil companies in Venezuela have occurred gradually within a framework of economic sanctions of more than three years.

The sanctions ended up aggravating the level of production of an oil industry already diminished by the expropriations between 2008 and 2010 of dozens of service providers, both domestic and foreign, explains the energy specialist and president of the consulting firm Inter American Trends, Antony of the Cross.

Coupled with the fall in the price of oil between 2014 and 2018, this reduced profit margins and PDVSA decided not to distribute the little money available for production, accumulating debts with these foreign firms, he explained to the voice of america.

“These debts had to be reflected in the balance of the companies as a liability and it always affects. The decision of those companies was to leave (the company) and the Maduro regime, in a very unprofessional way, said: ‘ok, you leave, but we don’t owe you anything.’ They accepted the penalty imposed by PDVSA and left”, describes the expert.

license and interest

The summary of foreign companies that divorced from the Venezuelan oil industry in the last two years is also known on the eve of the finalization in November of a license from the United States government that allows Chevron to operate in the country.

The company, based in Houston, denies having lobbied Washington for the White House not only to renew, but to extend, that license to expand its role in Venezuela, but official authorities and experts on the matter have warned the press that this will only be possible if the Maduro government resumes the negotiations in Mexico.

These talks with the opposition, facilitated by Norway, have been frozen since October 2021. The anti-Chavista Unitary Platform and its international allies hope that agreements are reached there to “rescue democracy” in the face of presidential elections in 2024 or earlier. , as the ruling party has suggested.

Companies such as Repsol (Spain) and Eni (Italy) are interested in oil and gas development opportunities in Venezuela, Orlando Ochoa, an expert energy economist, explains to VOA. Other firms are paralyzed and many others have transferred their shares, says the doctor in economics from the University of Oxford.

An eventual extended license would provide those opportunities, but it is not “even remotely enough to initiate a recovery” of the Venezuelan oil industry, he warns.

The first step depends on the political power in the hands of the Madurista government and consists of modifying laws to allow broader shareholdings for foreign firms in these joint ventures, which will allow them to “take control” of these operations.

On the other hand, honoring past debts and new economic commitments with possible partners for the operation of services that are currently undermined in Venezuela, such as electricity, direct flights to and from the United States, and having a firm relationship with contractors and external suppliers, details Ochoa.

“There are a number of opportunities that require much more than one license. This is part of the negotiations.”

De La Cruz, for his part, stresses that the withdrawal of foreign firms coincides with the possibility of a broader license for companies such as Chevron in the context of the global energy deficit due to the war in Ukraine and the extensive sanctions imposed by the United States. and Europe to the Russian government.

“Those oil fields (where these partners have withdrawn) become attractive. The regime is now going to look for new partners, because they are going to have the possibility of being able to get the crude out of Venezuela. Once Chevron starts extracting crude oil and exporting it (if that possibility materializes), the others will also have the same opportunity”, assures the expert.

The Venezuelan government says it feels ready to supply gas and oil to new destinations, despite the fact that its production quota has remained around 700,000 barrels of crude oil a day since November last year. The Maduro administration is thus far from meeting its goal of raising those levels to 2 million barrels per day.

Last week, Venezuelan Foreign Minister Carlos Faría said that Maduro was “willing to help” the European Union to overcome its energy crisis, although he warned that, for this, frozen assets in the bloc’s banks must be “released”.

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