Repsol sees glimmer of hope in Venezuela

The outlook for Venezuela's crisis-stricken oil and gas sector has brightened amid easing political tensions between Caracas and the international community, Spanish oil company Repsol said on Thursday. 

Venezuelan oil production has risen sharply in recent months following a partial lifting of US sanctions to allow Chevron to restart its joint ventures with state oil company PDVSA. 

"The political and economic situation has not changed but the prospects for operations have improved due to the incipient relaxation of the coercive measures of the United States against Venezuela," Repsol said in its quarterly earnings report. 

The Madrid-based company said its total equity exposure in Venezuela on June 30 was 327mn euros (US$360mn), down from 411mn euros six months earlier.  

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The average net production attributed to Repsol in Venezuela during the first half of 2023 was 60,800boe/d compared to 57,500boe/d in the same period last year. 

With the exception of Chevron, companies are currently prohibited by the US government from doing business with PDVSA and barred from shipping oil from their joint ventures.

But there have been signs that European oil and gas firms could also ramp up their Venezuelan operations in the coming months.  

According to Venezuelan officials, Italian company Eni and Repsol have received a local license to export natural gas liquids from their jointly run Cardón IV project. The partners are also reportedly preparing to ship limited volumes of Venezuelan oil to Europe, resuming a crude-for-debt swap deal that was halted in 2021 due to escalating sanctions. 

Last week, Venezuelan oil minister Pedro Tellechea said PDVSA has been in talks with Eni, Repsol and France's Maurel & Prom about their possible participation in a 2023 licensing round for natural gas blocks. 

Despite these developments, Repsol underlined its intention to comply with US sanctions. 

"Repsol continues to adopt the necessary measures to continue its activities in Venezuela with full respect for applicable international sanctions regulations, including US policies in relation to Venezuela," it said.

Repsol has equity stakes in eight oil and gas assets in Venezuela: Perla, Quiriquire Gas, Petrocarabobo, Petroquiriquire, Ypergas, Quiriquire EM, Mene Grande and Barúa Motatán.