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

Analysts said that the Italian oil company Eni improved its chances to'recover more than $2.3bn owed by Venezuela' with the signing of a new oil project deal in the country this week.

Eni has collected these receivables after nearly three decades of doing business in Venezuela.

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, economic collapse and U.S. sanction.

Eni signed a deal with PDVSA on Wednesday to develop?the?giant Junin 5 project heavy oil in the Orinoco Belt of the country, assuring a crucial role in U.S. backed efforts to revitalize the country's petroleum industry.

Eni's spokeswoman stated that the deal would "provide additional opportunities for value creation in the country, and for the recovery of outstanding receivables."

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

The project converts Eni’s existing stake in the Junin?5 into a production-sharing contract with Eni as the operator for 25 years.

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 THE COURSE

Eni, the Italian energy giant, and Repsol of Spain jointly own the Perla gas field in Venezuela. The debt is $400 million.

Eni?continued to operate the offshore Perla project, even after U.S. Sanctions halted Venezuela's payments. This contributed to PDVSA increasing debts. The?output is almost exclusively used for domestic use.

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 also owns a share in the offshore Corocoro oil field, where production was stopped in 2019 because of U.S. Sanctions against PDVSA. No news has yet been released on the?changes' to this project.

Eni currently produces 64,000 boepd in Venezuela, and industry sources say that 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 forced to stop using a key method of repaying Chinese loans.

(source: Reuters)