Venezuelan Parliament Votes to Support US-Venezuela Oil Agreement Involving 17 Oil Fields

en.Wedoany.com Reported - On September 1, Venezuela's National Assembly voted to support the recently announced US-Venezuela oil cooperation agreement. The vote came ahead of a visit to Caracas by US Energy Secretary Chris Wright; according to published arrangements, Wright will sign agreements with relevant private entities in Venezuela on September 2, with Chevron also planning to sign another agreement expanding its operations in Venezuela during the same period.

The terms of the agreement released by the US side on August 31 show that Venezuela has granted North American Blue Energy Partners (NABEP) a 100-year concession for 17 oil fields, involving proven oil reserves of approximately 65 billion barrels, accounting for about one-fifth of Venezuela's proven crude oil reserves. The relevant oil fields are mainly distributed in the Orinoco Oil Belt and the Lake Maracaibo region.

Under the agreement, NABEP plans to invest up to $100 billion in new oil infrastructure and oil field development in Venezuela. The terms released by the US side project that NABEP will pay approximately $200 billion in royalties and taxes to Venezuela during the first 25 years of the concession. Venezuela's previously published figures indicate that the development of the 17 strategic oil fields is expected to generate approximately $209 billion in tax revenue.

The agreement also includes crude oil supply and equity arrangements. NABEP grants the US State Department purchase rights to 20% of the production from its current and future operated oil fields, with the purchase price determined based on production costs; for the remaining 80% of production, the US State Department holds a right of first refusal. NABEP also grants the US Department of Defense's Strategic Capital Office a 35% equity stake in its parent company, with the US side also holding veto power over director appointments, and a majority of the company's board members must be US citizens.

The 17 oil fields include mature assets already in production. The arrangements previously announced by both sides indicate that the long-term total production of the relevant oil fields could reach up to 1.5 million barrels per day. Venezuela's current crude oil production is approximately 1.25 million barrels per day. Venezuela's interim president, Delcy Rodríguez, previously stated that the US-Venezuela energy agreement has a term of 25 years, with the goal of increasing domestic oil production to 1.5 million barrels per day.

Oil field operations will be conducted in accordance with Venezuela's revised hydrocarbons law. Current law permits oil production through two models: joint ventures and production-sharing contracts, with joint ventures having an operating term of 25 years, extendable by 15 years; production-sharing contracts allow production without acquiring an equity stake in the project. The specific oil field operating structure ultimately adopted by NABEP has not yet been announced.

On August 27, the US Treasury Department's Office of Foreign Assets Control simultaneously updated multiple general licenses related to Venezuela, including licenses for transactions in Venezuelan crude oil and petrochemical products, US diluent supply, oil and gas operations, and transactions with PDVSA. The updated rules remove the requirement that certain authorized contracts must be governed by the laws of US jurisdictions, but dispute resolution proceedings must still take place in the United States, the United Kingdom, France, or Singapore.

Separate from the overall 17-oil-field agreement, Chevron, ONGC, Eni, GeoPark, and GE Vernova are also advancing their respective energy agreements in Venezuela. Chevron is seeking to add blocks in the Orinoco Oil Belt and is negotiating for the Monagas North region; the relevant agreements are expected to be signed in succession as early as this week.