Key facts
- Italian oil company Eni signed a new oil project deal in Venezuela with PDVSA.
- The agreement is expected to aid Eni's recovery of over $2.3 billion in debt.
- The Junin 5 heavy oil project in the Orinoco Belt is targeted for development.
- 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, which analysts believe will improve its prospects of recovering over $2.3 billion in debt owed by state-owned PDVSA. The agreement, signed this week, focuses on developing the Junin 5 heavy oil project in the Orinoco Belt, a move that aligns with U.S.-backed efforts to revitalize Venezuela's oil sector.
Eni and PDVSA plan to jointly invest approximately $1.5 billion annually in the Junin 5 project, which currently produces about 12,000 barrels per day. The goal is to increase output to 400,000 barrels per day by 2030. Under the new terms, Eni's existing stake in Junin 5 is converted 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 Junin 5 project, Eni also holds stakes in the Perla natural gas field and the Corocoro offshore oil field. The company is owed an additional $400 million related to the Perla field, a joint venture with Spain's Repsol. While Eni's current production in Venezuela stands at approximately 64,000 barrels of oil equivalent per day, industry sources suggest this could eventually rise to 1 million barrels of oil equivalent per day. The U.S. government, represented by Energy Secretary Chris Wright at the signing ceremony, is reportedly looking to address Venezuela's debt burden, potentially impacting how Caracas repays loans to China.