The Daily Journal. — Italian energy company ENI is negotiating new contracts with Venezuela and Petróleos de Venezuela (Pdvsa) to align its operations with the country’s new legal framework for the oil sector. At the same time, the company expects to accelerate development of the Junín 5 project in the Orinoco Oil Belt, Reuters reported.
ENI Chief Executive Officer Claudio Descalzi said the company is holding discussions with Venezuelan authorities and its U.S. partners to move the agreements forward.
“We are having very good discussions with the (Venezuelan) minister and with Pdvsa. We are also talking with our U.S. partners (…) we have great potential, and we have one of the best blocks: Junín 5,” Descalzi told Reuters.
The company estimates that production at Junín 5 could rise to 200,000 barrels of oil per day, up from the approximately 12,000 barrels per day it currently produces.
Descalzi also said the company could move the field’s development forward quickly once investment resumes.
“This is not a standard exploration and production project that requires four or five years of investment (…) it will move very quickly,” the executive said, according to Reuters.
New contracts
According to Reuters, ENI and other Pdvsa partners are negotiating changes to existing agreements. Hence, they comply with the new legal framework approved by Venezuela’s National Assembly at the end of January.
For the Junín 5 project, ENI wants to establish a production-sharing contract instead of operating through a joint venture.
The Italian company considers the project one of its main opportunities to expand its presence in Venezuela, where it has maintained operations since 1998.
Junín 5 is located in the Orinoco Oil Belt and contains an estimated 35 billion barrels of certified oil reserves, according to data cited by Reuters.
Venezuela as an oil investment destination
ENI’s expansion plans come as Venezuela seeks to increase foreign participation in its oil and natural gas exploration and production activities.
Reuters noted that some companies now view Venezuela as an attractive alternative for exploration and production investments compared with other producing regions, particularly the Middle East, where armed conflicts continue to affect the energy sector.
In addition to Junín 5, ENI and Pdvsa jointly operate the Petrosucre project, which produces crude oil from shallow waters. The Italian company also partners with Spain’s Repsol in the offshore Cardón IV natural gas project.
ENI is not the only company seeking to expand its operations in Venezuela. The new contractual phase also involves other PDVSA partners as the country implements changes to its oil and gas legal framework.
Developing Junín 5 would allow ENI to multiply production at the block and position it as one of the fastest-growing assets in the company’s Venezuelan portfolio.
With reporting from Reuters.
