BP has won a licence from Caracas to explore and develop a gasfield off the coast of Venezuela, in the latest sign that Big Oil is returning to the country after the US toppled its leader in January.
The British company will join Abu Dhabi National Oil Company and a Qatari company with links to the Trump family in the venture.
BP’s announcement on Thursday follows Venezuela’s award of a licence to Shell in June, seven months after President Donald Trump urged western oil majors to plough $100bn into the Latin American country.
“When you see big oil companies like BP and Adnoc entering Venezuela it really gives more credence to the idea that the current government and the arrangement that currently exists with the US have staying power,” said Schreiner Parker, analyst at Rystad Energy, a research group.
Trump last week told supporters in Nevada that the US had taken “billions and billions” of barrels of oil from Venezuela since American forces captured the country’s leader Nicolás Maduro in January. Washington quickly installed Delcy Rodríguez as the acting and interim president, who quickly ushered in a new hydrocarbons law in co-operation with the US.
Venezuela only produces just over 1mn barrels of oil a day. The FT calculated last month that the Trump administration had so far collected more than $13bn in revenues from Venezuelan oil it has seized.
The new BP licence marks the entry to Venezuela of XRG — the overseas investment arm of Adnoc, UAE’s national oil company — which is expanding overseas after the emirate exited the oil cartel Opec in May.
The third licensee, UCC Oil and Gas Holding LLC, is a private company owned by the Qatari-based business magnates and brothers Moutaz Al-Khayyat and Ramez Al-Khayyat.
Both XRG and UCC have courted the Trump administration. XRG’s executive chair, Sultan al-Jaber, presented Trump with a vial of Abu Dhabi’s crude last year, alongside pledges to boost the value of the UAE’s energy investments in the US to $440bn over the next decade.
The Qatari-Syrian Al-Khayyat brothers who own UCC attended Trump’s second inauguration and are partners with Ivanka Trump and Jared Kushner in a proposed seaside development in Albania. UCC has recently begun expanding from construction into upstream energy and was recently also granted an oilfield concession in Libya without a competitive tender.
Washington has struggled to persuade international oil companies to invest in Venezuela following its capture of Maduro in January. Chevron, a long-term investor, is producing oil in the country. ExxonMobil has been cautious about returning and its chief executive Darren Woods described the country as “uninvestable” in a meeting with Trump earlier this year.
At its peak in the 1970s, Venezuela produced 3.5mn barrels per day but decades of corruption and mismanagement, coupled with US sanctions, have cut oil production to about 1.2mn barrels per day.
“We have finally managed to provide the necessary impetus for gas production in this extraordinary field,” said Rodríguez, who has received plaudits from Trump over her efforts to drum up investment in Venezuela, during an event to mark the new BP licence at the presidential palace in Caracas on Thursday.
Venezuela’s new hydrocarbons law, passed after the US attack in January, dramatically weakened the grip of the country’s state oil major PDVSA over the sector.
The US has responded by gradually unwinding sanctions on Venezuela and its oil industry that were imposed during the first Trump administration.
The licence awarded to BP and the other companies will let them develop the Loran Phase 2 gasfield, which is located off Venezuela’s north-east coast. It holds an estimated 4tn cubic feet of recoverable gas resources.
BP’s investment comes as it abandons a years-long green energy push and refocuses on oil and gas.
Parker at Rystad Energy said investing in offshore gasfields, rather than onshore operations in Venezuela, represented a “hedged bet on the country” and could allow them to liquefy and export the fuel through the Atlantic LNG terminal in neighbouring Trinidad and Tobago.
BP and Shell each own a 47 per cent stake in Atlantic LNG, with the remainder held by National Gas Company of Trinidad and Tobago. Operations have been constrained in recent years by a shortfall in feed gas.
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Unwinding oil sanctions and a return of various oil companies like BP and Adnoc presents a potential recovery of the Venezuelan oil sector.
With the revenues from Venezuelan drilling currently being held by Washington, the possibility of receiving current and future oil wealth could be used to push the regime into reform. The unspoken threat of the oil recovery being halted and the funds seized also hangs in the air should Caracas stop cooperating.