The state-owned PDVSA Petroleo of Venezuela and the Canada-based LNG Energy Group stated on Wednesday that they had signed an agreement, though there may be issues due to the US oil sanctions being renewed.
According to the company’s announcement, the agreement to develop and produce gas and oil in Venezuela was finalized on April 17. The project consists of two onshore regions, with a daily production capacity of 3,000 barrels.
LNG “will have a contractual entitlement to between 50-56% of the hydrocarbons production,” according to the announcement announcing the arrangement.
The agreement was made, meanwhile, in spite of a US sanctions exemption that is about to expire in a few weeks.
LNG said it will “assess in the coming days the applicability” of the sanctions and “determine the most appropriate course of action.”
“The company intends to operate in full compliance with the applicable sanctions regimes,” it added.
The United States declared last week that it would be reimposing sanctions on Venezuela due to the administration of President Nicolas Maduro’s suppression of opponents in the run-up to the elections in July.
The deadline for oil corporations to adhere to the penalties is May 31.
According to experts, businesses who want to cooperate with Venezuela may still be able to apply for special permits under the sanctions regime, just like US oil major Chevron did.
Venezuela possesses the world’s largest proven oil reserves, but years of poor management and harsh sanctions have caused production to drastically decline.
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