Venezuela’s state-run oil company, Petroleos de Venezuela (PDVSA), has reportedly signed at least nine new agreements with foreign service providers, including two Chinese companies, to maintain oil production and sustain foreign currency inflows following the exit of Chevron due to US sanctions.
The contracts allow foreign companies to operate existing wells and sell the output, diverging from PDVSA’s traditional exclusive trading rights, reported Bloomberg, citing undisclosed sources.
These agreements are part of President Nicolás Maduro’s strategy to offset the withdrawal of Western oil majors, whose licences expired after the US Government declined to extend sanctions waivers.
Chevron, responsible for nearly a quarter of Venezuela’s oil production, saw its licence expire in early April, according to Bloomberg.
The company had until 27 May to complete wind-down activities.
Licences for other US service providers, namely Halliburton, Schlumberger, Baker Hughes, and Weatherford International, also expired in early May.
Venezuela Vice-President and Oil Minister Delcy Rodriguez said: “PDVSA has a plan to keep producing oil despite the US’ unilateral coercive measures.”
The new contracts allocate operational rights to foreign companies over blocks in Zulia state and the Orinoco Belt, Venezuela’s main oil regions.
PDVSA will hold at least a 50% stake in the crude output, with the partner companies managing operations and receiving a share of oil sales.
These companies will also benefit from certain tax exemptions. PDVSA will finance its portion of investment through crude shipments.
The companies involved include Aldyl Argentina, Anhui Guangda Mining Investing and China Concord Resources, according to internal PDVSA documents reviewed by Bloomberg.
A US company, North American Blue Energy Partners, affiliated with energy investor Harry Sargeant III’s Global Oil Management Group, signed a deal but reportedly withdrew due to the inability to secure a US operating licence.
National Assembly Member of the Energy Committee William Rodríguez told the news agency that: “The only way Venezuela can maintain and increase its production is by relying on private local and international companies that don’t care about US sanctions. Unlike 2019, when sanctions first hit, there is a framework in place to operate outside the US banking system and a structured market with ally countries, including China, Iran and Russia.”
Unlike earlier joint ventures, these 20-year contracts do not require approval from Venezuela’s National Assembly.
They are authorised under President Maduro’s anti-blockade law, which bypasses traditional legislative processes and restrictions on foreign participation in the oil sector.
Although Chevron can no longer produce oil in Venezuela, it holds a waiver to conduct equipment maintenance in the country.
PDVSA predicts that the nine blocks under these 20-year contracts will yield a combined 600,000 barrels per day with $20bn (1.97trn bolivars) in capital expenditure, according to the document.
The company plans to sign additional contracts in the coming months, partially reversing the oil nationalisation policies of late president Hugo Chavez from the mid-2000s, the report added.
“Venezuela signs nine oil deals to counter US sanctions – report” was originally created and published by Offshore Technology, a GlobalData owned brand.
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