Venezuela eyeing global majors to jumpstart offshore gas foray

Private sector interest in Venezuela's vast offshore gas resources is mounting amid signs the South American country will soon offer new opportunities for upstream investments, experts told BNamericas. 

Last week, UK-based subsurface data provider Geoex MCG said it signed a contract with Venezuela's oil ministry for a multi-client offshore seismic project.

The announcement has raised hopes that the Venezuelan government will accelerate plans to hold a new licensing round for exploration and production contracts. 

"This is part of a positive trend in the gas sector," José Chalhoub, a Caracas-based consultant for Venergy Global and Orinoco Research, told BNamericas in telephone interview.

"Natural gas production in Venezuela has been tremendously impacted by sanctions and a lack of investment for 10 years or more. The priority has been oil production. But the signs are now much more positive," he said.

Chalhoub added that any offering of offshore licenses was unlikely to occur before next year. 

Geoex MCG said the seismic surveys would include up to 51,683km of new 2D data, 38,396km of reprocessed 2D data, up to 4,565km2 of reprocessed 3D data and an extended geochemical analysis. 

"This project is an integral component of a broader campaign aimed at re-evaluating the country’s extensive hydrocarbon potential and in particular increase the certification of its gas reserves," Geoex MCG said in a statement. 

It added that "an announcement of a licensing round schedule" would follow, without providing details. 

Last July, Venezuelan oil minister Pedro Tellechea said state oil company PDVSA had been in talks with Eni, Repsol and Maurel & Prom about their possible participation in an auction for drilling rights, part of broader efforts to turn the country into a gas exporter. 

Antero Alvarado, a managing partner at Gas Energy Latin America in Venezuela, said the Geoex MCG contract would jumpstart plans for an offshore licensing round, first mooted in 2016.

"That's the idea," Alvarado told BNamericas. "All the blocks near Colombia and Trinidad and Tobago will be the most sought after."

He added that the seismic campaign showed "gas has a big future" in Venezuela, despite the fact most of the country's current gas production is associated with oil. 

Venezuela's natural gas reserves are estimated at 6.3 trillion cubic meters, the seventh largest in the world and the biggest in Latin America, according to the US Congressional Research Service. 

Standing in the way of possible investment is the specter of US sanctions. 

Washington rolled back a series of restrictions – mostly related to the oil and gas industry – on October 18 after the Nicolás Maduro regime reached an agreement with opposition parties to allow competitive, internationally monitored elections this year. 

The US state department is expected to decide whether to extend or end the concessions on April 18. 

"It is my personal view that there will be no reimposition of sanctions, at least before the US presidential election," Chalhoub said "The Joe Biden administration won't want any negative shocks to gasoline prices, which could become a political problem. There is also the issue of US companies with interests in Venezuela," he added.