Key facts
- Italian energy company Eni signed a new oil project deal in Venezuela.
- The agreement aims to help Eni recover over $2.3 billion in debt from PDVSA.
- The deal involves the Junin 5 heavy oil project in the Orinoco Belt.
- Eni and PDVSA plan to invest approximately $1.5 billion annually in the project.
- Output from Junin 5 is projected to reach 400,000 barrels per day by 2030.
Italian energy giant Eni has strengthened its position in Venezuela by signing a new oil project deal, a move analysts believe will improve its prospects of recovering over $2.3 billion in debt owed by the state-owned oil company PDVSA. This decision comes as the U.S. and Venezuela work to reopen the country's oil sector to international investment.
Eni, which has operated in Venezuela for nearly three decades, signed an agreement with PDVSA to develop the Junin 5 heavy oil project in the Orinoco Belt. This project is expected to see an investment of approximately $1.5 billion annually, with output projected to reach 400,000 barrels per day by 2030. The deal converts Eni's existing stake into a 25-year production-sharing agreement, with Eni serving as the field operator. Eni's CEO, Claudio Descalzi, indicated that drilling would commence immediately.
Beyond the direct debt to Eni, Venezuela also owes $400 million to a joint venture for the Perla field, co-owned by Eni and Spain's Repsol. Eni continued operations at the offshore Perla gas project despite U.S. sanctions impacting Venezuela's payments and contributing to PDVSA's debt. Recent developments have opened possibilities for future Venezuelan gas exports, enhancing Eni's outlook.
Industry sources suggest Eni's current production in Venezuela is around 64,000 barrels of oil equivalent per day, with potential to increase to 1 million barrels of oil equivalent per day. The U.S. government, represented by Energy Secretary Chris Wright, has indicated that China will not have claims on revenue from fields partially controlled by Washington, potentially altering Venezuela's debt repayment mechanisms for Chinese loans.