Venezuela hands former ConocoPhillips-operated oil and gas fields to little-known firm as U.S. reimposes sanctions

Fabiola Zerpa, Bloomberg April 18, 2024

(Bloomberg) – Venezuela plans to tap a little-known firm to take on key oil and gas fields and facilities that were once operated by ConocoPhillips as the U.S. reimposes sanctions. 

Venezuelan firm A&B Investments will partner with Petróleos de Venezuela to run heavy oil fields in the Orinoco Belt and an associated processing facility, according to people familiar with the negotiations who asked not to be named because discussions are ongoing.

The deal was announced shortly before the deadline for the expiration of U.S. sanctions relief. Restrictions will close the door for players looking to enter the South American country and could usher in a return to Trump-era restrictions on PDVSA’s oil activities.

The Biden administration has reiterated its stance that President Nicolas Maduro has failed to follow through on commitments reached in October for democratic conditions for the presidential elections on July 28, including allowing all candidates to run.

The new joint venture will be called Roraima, which is the name of a Brazilian state. A Brazilian firm is behind the financing, two of the people said, without disclosing details.

Venezuelan businessman Jorge Silva Cardona, who leads A&B, has a history of doing business with Brazilian firm J&F Investimentos SA, the holding company of the billionaire Batista family that owns the world’s largest meat producer, JBS SA.

Silva is a “commercial representative” for J&F and offers “investment opportunities for the group and shareholders to evaluate in Venezuela,” according to J&F. J&F said Wednesday that none of its shareholders “has any investment commitments in Venezuela” and that it continues to evaluate opportunities throughout the region.

Silva didn’t immediately reply to a request for comment, while PDVSA declined to comment.

Roraima is expected to take on the Petro San Felix assets, including a port, which late president Hugo Chavez expropriated from ConocoPhillips in 2007. Its fields and upgrader subsequently fell into disrepair after the country suffered an economic collapse and came under US sanctions.

A&B’s plan targets production of 90,000 bpd within two years and calls for investments of $600 million for the upgrader. The venture was approved by the National Assembly on Tuesday, though terms of the deal have yet to be signed by PDVSA authorities.

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