SLB and Hunt Oil have signed the first new production deals with Venezuela's state oil company PDVSA since Washington captured Nicolás Maduro in January. The initial wave of agreements is expected to add only 300,000 barrels a day, far below the millions of barrels officials had once floated, even as Venezuela already ships more than 500,000 barrels a day to U.S. refineries.
SLB and Hunt Oil became the first two U.S. companies to sign new deals with PDVSA last week, marking a shift after months of slow progress in reopening Venezuela's crude oil sector. Reports indicate more deal announcements will follow in the coming weeks as international oil companies seek access to the country's reserves.
Independents move first on new deals
Hunt Oil signed one of the first production agreements with PDVSA, with Semafor reporting the Texas producer became "one of the first to sign a production agreement with state-owned PDVSA". SLB, for its part, will provide AI software to facilitate drilling and is working to import oil rigs into the country.
Venezuela holds an estimated 303 billion barrels of oil, about 17% of the world's proven reserves, yet produces just 1% of global supply after decades of underinvestment, mismanagement, and sanctions. That gap looks especially attractive to world leaders given the closure of the Strait of Hormuz, which normally carries about one-fifth of the world's oil and gas trade on a typical day.
A political opening since Maduro's capture
Venezuelan oil assets opened to outside interests after the Trump administration captured and incarcerated former President Nicolás Maduro in a January raid. Progress then slowed as negotiations stalled and the country faced back-to-back earthquakes. But interim president Delcy Rodríguez unveiled new regulations last month offering more favorable fiscal terms to foreign oil companies.
Operating in Venezuela still carries risk. Earthquake damage, a shaky political situation, crumbling infrastructure, and frequent blackouts have kept most supermajors on the sidelines, while smaller independents move to derisk projects and sign contracts faster.
Incremental output, but sizable flows to the US already
The deals now being inked will likely add only 300,000 barrels a day to Venezuela's output over the next year, short of the millions of barrels officials had once floated. Even so, the flow to the United States is already substantial: more than 500,000 barrels per day are now moving from Venezuela to the US, according to Under Secretary of Energy Kyle Haustveit. That is a massive share of Venezuela's total output of about 1.25 million barrels per day.
Source: Oilprice.com
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