RPT-Private Chinese firm producing oil in Venezuela under rare 20-year pact, source says

China Concord Resources Corp. has started developing two Venezuelan oilfields. The company plans to invest over $1 billion in an investment project that will produce 60,000 barrels of crude oil per day by the end of 2026. An executive involved directly in the project confirmed this. This is a rare private Chinese investment in an OPEC nation that has been struggling to attract foreign capital because of international sanctions against the government of President Nicolas Maduro. This is the first time that the investment amount and production plan have been reported. Beijing is a close ally of Maduro, and of his predecessor, late President Hugo Chavez. It currently purchases more than 90% the total Venezuelan oil exports.

CNPC, the Chinese state-owned oil company, was one of the biggest investors in Venezuela's petroleum sector before U.S. sanctions on Venezuela were imposed in 2019. China was a major lender to Venezuela.

The executive said that CCRC started negotiating their participation in two oilfields – Lago Cinco, and Lagunillas Lago – in early last year. In May 2024, they signed a 20-year contract for production sharing with Venezuela.

In 2020, the Anti-Blockade Law, which was introduced by Venezuelan authorities to deal with U.S. sanction, will allow investors to take on the role of operators in exchange for a pre-agreed share of production.

PDVSA, Venezuela's oil minister and the PDVSA did not respond to comments.

In recent years, PDVSA sought partners to develop a number of oilfields located in Venezuela's second-largest oil producing region - Lake Maracaibo. According to a PDVSA report, the majority of partners were little-known companies that had no experience in oil production.

CCRC, which had no prior experience in oil drilling, has sent around 60 Chinese oilfield developers and a Chinese drill rig to the area since September last year. The executive said that they hoped to quickly reopen 100 wells and recover crude production.

The executive said that production at both fields has increased to 12,000 bpd. This is a significant increase from the largely dormant state they were in due to lack investment and expertise.

CCRC aims at developing 500 wells to increase output up to 60,000 bpd, he added. He said that the oil is a mixture of heavy and light oil with lighter crude going to PDVSA, and heavier crude heading to China.

The executive stated that because of U.S. sanctions against Venezuela's oil industry, "no big names would dare to operate there." This gave opportunities to smaller companies such as Concord.

The state oil company PDVSA controls joint ventures, contracts and has stabilised oil production at 1 million barrels per day, partly because U.S. licensing allows a limited number foreign partners to export oil and operate in the country.

Since the U.S. placed energy sanctions against Venezuela in 2019, many Chinese state-owned oil companies have stopped lifting crude oil. Chinese independent refiners continue to purchase oil through traders.

(source: Reuters)