International oil major Shell is closing in on the first big oil production deals with Venezuela since the US capture of illegitimate president Nicolas Maduro in January, sources close to the negotiations told Reuters.
Shell signed preliminary oil and gas agreements with Venezuela last week, when US Interior Secretary Doug Burgum was in Caracas. Venezuela's government did not make public the details of those deals and the fields included.
Shell confirmed in an email it signed several agreements with the government, engineering companies Vepica and KBR, and oil-service firm Baker Hughes, which, "formally articulate Shell's intent to progress a variety of opportunities with Venezuela," including offshore gas, onshore oil and gas, exploration, local content and workforce development. It did not disclose the fields or give further details to Reuters.
Shell's only project in Venezuela before the preliminary agreement was announced was the flagship Dragon offshore development near Trinidad. The company has struggled to advance it after the US imposed sanctions on Venezuela's energy sector in 2019. Shell had sold its stake in the flagship Urdaneta Oeste oilfield in Lake Maracaibo to French company Maurel Prom in 2018.
PDVSA and the oil ministry are in talks with about a dozen joint venture partners willing to expand operations to neighboring fields, mature areas or blocks marked as greenfields, where infrastructure development is needed.
Chevron and Venezuela's government are also negotiating for the US major to return two untapped offshore natural gas areas to Venezuela at the Plataforma Deltana project on the maritime border with Trinidad and Tobago, which could be reoffered for private investment.
It is unclear what the terms would be for Chevron to give up those stakes. Chevron is focused on oil rather than gas production in Venezuela.
Venezuela in February began a review of all oil and gas projects, starting with production sharing contracts signed by Maduro's administration with little-known firms, and more recently moving to joint ventures with larger partners. The government is requesting documentation on projects from participating companies, the sources said.
PDVSA has taken over the administration and oil sales of many production sharing contracts while it conducts the review, suspending them temporarily. Oil ministry officials have told oil executives they would complete the review as soon as the end of March, sources said.
Officials from the oil ministry have told oil executives that projects that were inactive or that did not meet investment targets could see their contracts revoked under the review.
The US Government also is carefully checking company credentials and sanctions compliance before granting clearance to any existing or new partners, separate sources said.
(Reporting by Marianna Parraga in Houston and Deisy Buitrago in Caracas, additional reporting by Sheila Dang. Editing by Simon Webb and David Gregorio)