Spain’s Repsol will return to Venezuela after it signed a new deal with the Venezuelan government, with plans to increase crude oil production in the country by 50% from current levels.
Per media reports, the Spanish major secured licenses to return to Venezuela from the U.S. administration, which controls Venezuela’s oil industry, and agreed deals with U.S. energy companies to restore production, which currently averages some 45,000 barrels daily. Over the next three years, Repsol plans to triple that.
Venezuela produced an average of 1.1 million barrels of crude daily this month, up from 942,000 barrels daily in February, according to a PDVSA presentation, as cited by Reuters.
The turnaround followed the selective lifting of sanctions by the United States after it removed President Nicolas Maduro from power and took him to the U.S. to stand trial for drug trafficking, while effectively taking over Venezuela’s oil industry.
The turnaround will take a while, however. In the 1990s, Venezuela pumped around 3 million barrels of crude daily, but since then, the combination of bad management and U.S. sanctions has significantly reduced its production.
Oil majors, however, are returning to the country that is estimated to hold the world’s most abundant oil reserves. Chevron has been expanding since the U.S. takeover, Shell is in talks to develop gas resources, and now Repsol is returning to Venezuela.
Earlier this month, Chevron closed an asset swap deal with PDVSA that would see its stake in their joint venture Petroindependencia rise to 49%, while in exchange it would transfer some gas assets to the Venezuelan state company.
Shell, meanwhile, earlier in the year confirmed it planned to go ahead with exploration work at the Dragon project—an offshore gas field that contains an estimated 4.5 trillion cu ft in reserves. The plan is to feed the gas into the company’s LNG facility in Trinidad and Tobago.
By Irina Slav for Oilprice.com
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