Venezuela signs major oil deals and moves on

Venezuela’s interest in the resources of international energy companies and their interest in Venezuelan oil and gas it became apparent after The US eased its sanctions on Caracaswhich has since signed contracts with at least four foreign companies, and is evaluating cooperation with one more.

December 18, two months later NOW announced flexibility, Venezuelan state PDVSA signed an agreement with Spanish multinational Repsol and in the following days he did the same with Korsou Refinery (Rdk) from Curacao and with National Gas Company of Trinidad and Tobago.

These companies joined French Maurel & Prom, with whom PDVSA in November they agreed to reactivate the joint venture.

Except, India announced that it will buy crude oil from Venezuela, which in 2020 was the third largest supplier of oil to that Asian country, while PDVSA studies establishing cooperation with Mexican state-owned Pemex.

International need
He economist Luis Vicente León he told EFE that he was “hyperwide” flexibility, which “allows Venezuela to export” and “collect oil and gas” in “any part of the world”, although it represents an “advantage” for Nicolás Maduro’s government, also a “victory” for the USA and “Total West”in light of the “energy needs” of the world due to the current “geopolitical conflict”.

“Today there is a need for oil, today there is a need for gas. Although it could be projected that in the coming years or decades oil will lose its importance as an energy source, (…) today still close to 80% of the entire energy supply is still fossil,” he said.

And that energy, he continued, “is found in unpleasant countries”, among which – he noted – is Venezuela itself.

In his opinion, foreign companies not only “want to produce” in the South American country, but also “would be delighted if other” companies “delay” so that they can “establish agreements with PDVSA” i “produce the largest number of fields” and “colonize spaces”.

Venezuelan need
Lion, president of the survey company Datanalisis, He said Venezuela “needs investment to recover its oil industry”, which is “very dilapidated”, with “weakened production capacity”, technological backwardness and a lack of human talent due to migration.

However, the expert assured, PDVSA “does not have enough funds” for that, and his “financial needs” are “very large”.

But now, a country whose main source of income is oil, “will improve your cash flow” through the payment of taxes, dividends and privileges of foreign energy companies, which have a minority share in joint investments with PDVSA.

In addition, the Venezuelan state-owned company, which exports “directly” between 200,000 and 300,000 barrels per day (bpd), according to León’s calculations, will be able to sell its crude at market prices and not at discounts, which were “40%.”

A temporary uprising?
The easing of sanctions expires in April, under the terms of the US, which has threatened to reimpose them if María Corina Machado, candidate of the main opposition coalition for the 2024 presidential elections. remains disqualified from competing for elective office, and if Venezuela it does not release “political prisoners,” an issue on which progress was made this month.

The government released about thirty people, including 10 Americans, in exchange for their freedom Colombian businessman Alex Saab, a close associate of Maduro who was jailed in Miami, accused of conspiracy to launder money.

However economist and oil expert Luis Oliveros, According to what he told EFE, he sees that it is “quite difficult” to return the sanctions.

“The chances of the sanctions being reinstated are quite small. (…) In its own way, at its own pace, in its own style, the Maduro government has adhered to what the agreements say,” assured the expert.

According to analysts, the release and easing of sanctions, along with the recent deal on deportation flights, are part of a “negotiating process” between the two countries, without relations since 2019.

On December 20, US President Joe Biden said Maduro was “moving forward” with his commitment to holding “free” elections.

Among the reasons that could be in favor of extending the lifting of sanctions, Oliveros pointed out the global need for oil, the largest reserves of which are in Venezuela, and the debts that nation has to companies such as the American Chevron, which resumed operations this year. country at the end of 2022, including Repsol.