Venezuela finalizes an agreement with Repsol and Eni to export gas to Europe

Platform of Repsol's Perla project in Venezuela.REPSOL

The Government of Venezuela has issued a license to international energy operators Repsol of Spain and Eni of Italy to exploit condensates and export Venezuelan natural gas to European markets. The news was confirmed by Pedro Tellechea himself, president of Petróleos de Venezuela (PDVSA), who explained that these two companies had been waiting for the opportunity to invest to materialize and had shown their interest in increasing the volume of their operations in the country.

The exploitation agreement would bring new components to the European energy map in the context of the war crisis in Ukraine. Venezuelan gas would reach Europe, which suffers deficiencies due to the energy crisis. On the other hand, the concessions made to Venezuelan President Nicolás Maduro to manage investments and royalties, which he needs due to the serious economic situation that the country is going through, could call him to encourage a political opening. Both corporations are expected to deepen their work on the Cardón IV Project, called the Perla Project, in the Gulf of Venezuela, which has enormous potential, and which has already been increasing the capacity of its operations in recent months, by 30% more since 2019.

Tellechea has just presented a Comprehensive Productive Recovery Plan for the Venezuelan oil industry, which aims for the nation to reach one million barrels of crude oil produced by July. The president of the state company PDVSA has stated that the idea is to increase gas production in Cardón IV "at full capacity", which is about 1.300 billion cubic feet (and which at the moment is at 580 million cubic feet). He said that the start of operations in these fields "will depend on the speed with which the disbursement is invested."

The commitment achieved in Venezuela by Repsol and Eni – which have obtained licenses from the Office of Foreign Assets Control of the United States (OFAC) to manage these agreements despite international sanctions – is the second in importance achieved by the administration of Nicolás Maduro, after the extension of the visa to Chevron. U.S. operator whose production is partially saving the coffers of the Republic and alleviating the exchange stability of the country. The new movements may represent a new relief in the accounts of the Maduro government, and perhaps could positively intervene in the behavior of the Gross Domestic Product this year.

Eni and Repsol had been negotiating these agreements for some time, and had developed a long lobby to obtain permits to operate in the country despite international sanctions against the regime of Nicolás Maduro. The High Representative for Foreign Policy of the European Union (EU), Josep Borrell, recognized the project three weeks ago in an interview with EL PAÍS. "It is important that there are economic projects that benefit Europe and Venezuela. Venezuela right now is burning gas that it cannot use, when gas is officially not subject to sanctions, only oil. It is one of the countries that produces the most methane for the benefit of anyone, while in the EU we need gas," he said. For that, he added, the permission of the United States was needed, which has now been obtained.

The flexibilizations advanced to favor gas and oil investment in Venezuela also seek that Maduro commit to the holding of fair and verifiable presidential elections in 2024. It is about pushing Chavismo to return to the negotiating table in Mexico with the opposition, a dialogue stopped since November when the Venezuelan president decided not to sit at the table again until the sanctions were lifted.

Venezuela is the country with the eighth largest gas reserves in the world, and has traditionally been one of the main Latin American producers, although its industry has weakened and there are many difficulties of domestic gas service in the country. The most important projects of the gas productive expansion, announced with all the pomp by Hugo Chávez, were postponed, or never fully executed.

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