The field will be operated by BP and each party will have an equal working interest
By Adam Whittaker
Britain's BP and the United Arab Emirates' XRG will explore a gas field offshore Venezuela, in an indication that oil majors are tentatively returning to the country under its new regime.
The companies were awarded an exploration and production license for phase 2 of the Loran field, which could give them access to an estimated 4 trillion cubic feet of recoverable gas. They join Shell, which in June was also granted a license to extract 1.7 trillion cubic feet of gas from the field.
Energy majors have been reassessing Venezuela after the ousting of former President Nicolas Maduro by the U.S. The country holds some of the world's largest oil resources but years of underinvestment mean it lacks the infrastructure needed to extract it competitively.
At the same time, oil majors lack confidence that the political and legal frameworks are in place to protect their investment after being stung in the country in the past.
Despite President Trump's encouragement, Big Oil has yet to make significant investments.
ExxonMobil, Chevron and other major oil companies have focused on securing a small number of the country's most attractive drilling spots but talks with Venezuelan leaders recently hit an impasse, The Wall Street Journal reported in late July, citing people familiar with the negotiations.
Chevron is the only U.S. oil major currently active in Venezuela and has been growing production to a record of nearly 300,000 barrels a day since Maduro's ouster earlier this year. It is doing this, however, without new billion-dollar investments.
XRG is the Abu Dhabi National Oil Company's international investment arm. Qatar-based UCC Oil and Gas will also hold an interest in phase 2. The field will be operated by BP and each party will have an equal working interest.
ExxonMobil and ConocoPhillips pulled out of Venezuela in 2007 after former President Hugo Chavez nationalized their assets. Others are still owed billions of dollars for oil and gas they continued to produce and deliver to the country.