Eni, the Italian energy company, doubles its efforts in Venezuela to recover debt

Analysts said that the signing of a new deal for an oil project in Venezuela this week has increased the chances of Eni recovering the more than $2.3billion owed to it by Venezuela.

Eni has collected these receivables after?nearly 30 years in Venezuela from the state-owned PDVSA.

Eni was faced with a difficult choice as Washington and Caracas reopened Venezuela's oil industry to international investors this year. It could either deepen its commitment or risk worsening their chances of recovering their claims, while the United States pushed to restructure its old debt.

It is starting to pay off that the Italian group decided to stay in the country, despite the political turmoil and economic collapse? and U.S. sanctions.

Eni signed a deal with PDVSA on Wednesday to develop the Junin 5 heavy-oil project?in the Orinoco Belt of the country, playing a major role in the U.S.-backed effort to revive the oil industry.

Eni's spokeswoman stated that the deal would provide more opportunities to create value for?the nation and to recover outstanding receivables.

Eni and PDVSA intend to invest $1.5 billion per year in this project. It currently produces 12,000 barrels of oil per day. The output is expected to reach 400 000 bpd in 2030.

Eni will convert its existing stake in Junin 5 into a production-sharing contract for 25 years, with Eni as the operator.

Barclays' analysis stated that the deal was an opportunity to unlock production in the future and recover receivables.

Claudio Descalzi, Eni's Chief Executive Officer, announced on Wednesday that the work at Junin 5 would begin immediately after a Caracas ceremony in which a few international oil companies signed deals with Venezuela. The ceremony was attended by Venezuelan President Delcy Rodriquez and U.S. Energy Sec. Chris Wright.

He said, "We'll start drilling the first hole tomorrow."

STAYING ON THE COURSE

Eni, the Italian energy giant, and Repsol of Spain jointly own the Perla gas field in Venezuela. The joint venture has been operating for 20 years.

Eni operated the offshore Perla gas project, even after U.S. Sanctions halted Venezuela's payments. This contributed to PDVSA increasing its debts. The production has been used 'almost exclusively domestically.

Eni's prospects were boosted by a new agreement signed in March that opened up the possibility of future Venezuelan exports to Italy.

Davide Tabarelli is the head of Nomisma Energia, an energy consultancy.

Eni owns also a stake in Corocoro, an offshore oilfield where production was stopped in 2019 because of U.S. Sanctions against PDVSA. No news has yet been released on the status of?that project.

Eni produces 64,000 boepd per day in Venezuela and this could eventually reach 1 million boepd.

Washington wants to reduce Caracas' massive debt. Wright said recently that China will have no claim to the revenue generated by Venezuelan fields, which would be controlled in part by Washington. This could mean that Caracas is no longer able to pay its Chinese loans.

(source: Reuters)