Venezuela signs TotalEnergies deal in push for foreign investment into energy sector

Venezuela has signed an energy agreement with France’s TotalEnergies, the latest in a series of deals with international companies as Caracas seeks foreign investment to revive its oil and gas sector. Interim President Delcy Rodriguez oversaw the signing of a memorandum of understanding between state oil company PDVSA and a unit of TotalEnergies in Caracas on Saturday, her office said. The agreement, described by the government as an energy co-operation pact, was signed by PDVSA president Hector Obregon and Francisco Javier Rielo, TotalEnergies’ senior vice president for the Americas. Details on the scope or value of the agreement were not disclosed. Ms Rodriguez has said changes to Venezuela’s hydrocarbons law, approved earlier this year, provide a legal framework aimed at attracting new investment into the country. The agreement comes amid a broader push to attract international energy companies after the removal of Nicolas Maduro as president in January. Earlier this week, US oil producer Continental Resources signed a memorandum of understanding with PDVSA to jointly develop the Ayacucho 2 block in Venezuela’s Orinoco Belt, one of the world’s largest deposits of heavy crude. Other agreements announced this month include deals with Italy’s Eni and US energy technology company GE Vernova. The latter is expected to support efforts to modernise Venezuela’s electricity grid as the government seeks to rebuild energy infrastructure after years of underinvestment. US company Chevron plans to invest $7 billion to double its Venezuelan production to 600,000 barrels per day over seven years, while North American Blue Energy Partners plans to invest up to $100 billion across 17 Venezuelan oil projects. Venezuela has also opened up its natural gas sector to new foreign investment. Abu Dhabi’s XRG entered the country in August after being awarded a licence for the offshore Loran gasfield, becoming an equal interest partner alongside BP and Qatar’s UCC. The second phase of the project contains more than 4 trillion cubic feet of proven gas resources. The deals come as Washington seeks a significantly larger role in Venezuela’s energy industry. US President Donald Trump has said an agreement with Caracas would give an American-backed venture control of about 65 billion barrels of Venezuelan oil reserves, while also saying Venezuelan crude could be used to replenish the US Strategic Petroleum Reserve. However, analysts say substantially increasing Venezuelan production could take years because of underinvestment and the cost of developing and processing the country’s extra-heavy crude. Questions have also been raised over the structure and implications of the US agreement. Years of declining investment, ageing infrastructure and international sanctions have left Venezuela producing well below the levels reached at the height of its oil industry, despite its vast resource base. The recent agreements are intended to bring in the capital and technical expertise needed to raise output. Venezuela holds about 303 billion barrels of proven crude oil reserves, the largest in the world.