After the recent exit of several foreign companies from Venezuela, a new range of opportunities is opening up for those interested in exploiting fossil fuels in the country. This has resulted in a fertile field for the arrival of private partners and investors for PDVSA's joint ventures. Therefore, the Venezuelan state-owned company has affirmed its desire to receive investments for the growth of the venezuelan oil industry. Nested to the possibility of establishing customized procedures and agreements depending on the reality of each negotiation.

In that sense, in this article we will explain the current context and the implications of new foreign investments in the Venezuelan oil industry.

Current context of the Venezuelan oil industry

At present, at least 15 of the international firms operating in Venezuela have sold or divested their shares in the joint ventures they share with PDVSA. Companies such as TotalEnergies, Equinor and Inpex no longer have a presence in the oil fields, refineries and other oil and gas exploitation processes in Venezuela. Therefore, a new range of possibilities is now open for French, Norwegian, Japanese and other companies wishing to operate in the country.

In previous months, OPEC acknowledged the rapid revival of the industry and the contributions it has made Venezuela in the international energy market despite the U.S. sanctions imposed on PDVSA. And according to new exploitation authorizations from the United States for ChevronIn addition, oil production is expected to increase in the country. Likewise, Chevron's executive director, Mike Wirth, assured that production will not increase overnight, but the restoration of fields and equipment will begin, which is very necessary in the Venezuelan industry.

Although this does not mean that the U.S. sanctions are being lifted, there is evidence of a relaxation due to the world energy context. Where the lack of Russian oil has been very evident, and has led to higher fuel prices both in the European Union and in other American countries.

Reforms needed to initiate industry recovery

In an attempt to avoid rising prices of gasoline and other oil derivatives, the United States released more than 200 million barrels held in reserve. But these extraordinary releases are expected to end soon, thus evidencing a growing need for Venezuelan oil to supply the basic needs of its population. This is due to low transportation costs, despite the fact that the properties of Venezuelan crude oil make it a more complex oil to refine.

In this scenario, the Venezuelan government has opted to open up to foreign investment in spite of the economic limitations resulting from the sanctions. Thus, PDVSA has made visible the option of establishing Production Services Agreements that benefit private partners within the joint ventures that may be established. Although the benefits that these companies may obtain are not specified, the possibility of negotiating with the purpose of establishing feasible models and projects for both parties is perceived.

On the other hand, the licenses issued by OFAC in May of this year to Chevron, Halliburton, Schlumberger Limited, Baker Hughes Holdings LLC and Weatherford International for the maintenance of facilities within Venezuelan territory. They have been able to make negotiations between the United States and the Venezuelan government more flexible, so that these companies can negotiate with PDVSA possible debt collection or liquidate essential contracts.

Spanish and Italian companies express interest in Venezuelan oil industry

Once the previous partners have withdrawn, the Venezuelan government must look for new investors. But with the difference that now there is the possibility of returning to commercialize crude oil without having to circumvent international sanctions. In this case, it is only necessary to wait for the normalization of Chevron's activities in the country, as well as the export of crude oil by that company. For these legal processes to be completed and for other companies to have the same opportunity to exploit and commercialize Venezuelan crude oil.

Thus, the Venezuelan state claims to feel prepared to supply gas and oil to other countries, but is aware that it needs strong foreign investment to recover the industry. To which companies, such as the Spanish Repsol and Italy's Eni, which resumed operations this year after the U.S. authorizationin a joint venture at 50% in the Cordon IV gas field. They have expressed interest in increasing production to begin exports to Europe and the United States.

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