Venezuela's PDVSA inks oil deal with firm part-owned by Florida Republican




  • In Business
  • 2019-01-07 14:43:18Z
  • By By Luc Cohen and Brian Ellsworth
FILE PHOTO: The corporate logo of the Venezuelan state-owned oil company PDVSA is seen at a gas station in Caracas
FILE PHOTO: The corporate logo of the Venezuelan state-owned oil company PDVSA is seen at a gas station in Caracas  

By Luc Cohen and Brian Ellsworth

CARACAS (Reuters) - Venezuelan state oil firm PDVSA [PDVSA.UL] has signed a deal with little-known U.S. energy firm Erepla that is part-owned by a prominent Florida Republican to help increase the socialist-run country's plummeting crude oil output, the company said.

Erepla Services LLC, part-owned by Republican Harry Sargeant III and which Delaware state records show was only registered two months ago, said it plans to invest up to $500 million to increase production at three Venezuelan oil fields in exchange for a portion of the crude produced.

The arrangement faces significant hurdles including obtaining an exemption from Trump administration sanctions that block U.S. companies from providing financing to the government of President Nicolas Maduro or Venezuelan state firms.

It is a further sign that Venezuela is tapping inexperienced firms to stem massive declines in crude output as more established oil companies steer clear of the troubled country due to concerns about U.S. sanctions and overall dysfunction.

Erepla said that the agreement will "revitalize oil production" at the Tia Juana Lago and Rosa Mediano fields in the western Lake Maracaibo region and in the Ayacucho 5 bloc, in the eastern heavy-oil Orinoco Belt.

The company added that the deal gives it "enhanced managerial participation" in the projects and will be responsible for procurement, a key difference from long-established joint ventures between PDVSA and oil majors like Chevron Corp <CVX.N>, where PDVSA has full operational control.

It said Erepla would be "responsible for the entirety of the investment." A spokesman declined to elaborate on how it would raise the funds.

Neither PDVSA nor the Oil Ministry responded to a request for comment.

The Erepla spokesman confirmed media reports that Sargeant, who has served as finance chairman of the Florida Republican Party and currently runs asphalt trading and shipping firm Global Oil Management Group, is a part-owner of Erepla.

The spokesman declined to say what size stake Sargeant has in the company.

The deal is the first new partnership between PDVSA and a private company since Oil Minister Manuel Quevedo in August announced a set of "joint service agreements" with 14 little-known companies that did not appear to have experience operating oilfields and PDVSA.

Those contracts were similar to ones rolled back under late socialist leader Hugo Chavez, who expanded the state's role in the OPEC country's energy industry.

Output has continued to stagnate since the deals were signed, dropping to 1.46 million barrels per day in November from more than 2 million at the end of last year, according to OPEC figures, in a sign of the company's struggles under military rule.


COMPLYING WITH SANCTIONS

Washington has levied several rounds of sanctions on Venezuelan that block U.S. citizens from providing financing to Maduro's government without placing explicit restrictions on commerce or investment.

But because PDVSA is perennially cash-strapped, agreements to boost production usually involve partner companies putting up significant amounts of up-front funding that could run afoul of sanctions.

Erepla said it had applied to the U.S. Treasury Department's Office of Foreign Assets Control, which implements sanctions, for a "Specific License affirming the agreement." The Treasury Department, which is affected by the ongoing U.S. government shutdown, did not immediately respond to a request for comment.

Consulted on how a company with no evident oil-field experience would be in a position to take on the project, the Erepla spokesman said the firm's "ownership includes serious and significant oilfield production capabilities as well as heavy oil refining ability."

Maduro, who has deepened Venezuela's relationships with U.S. adversaries like Russia and China, often accuses the United States of plotting to overthrow him and steal the OPEC nation's oil wealth.

The deal has been criticized by hardline Chavez supporters, who say it cedes too much control to a foreign company.

"This is the worst giveaway in the history of our country's oil industry," former Oil Minister Rafael Ramirez wrote in a blog post on Sunday. "Maduro and Quevedo will have to be held to account for giving away assets belonging to all Venezuelans and ceding our sovereignty over managing our oil."


(Additional reporting by Mayela Armas and Corina Pons in Caracas; Editing by Susan Thomas)

COMMENTS

More Related News

Exclusive: U.S. warns governments, firms against aiding Iran fuel shipments to Venezuela - envoy
Exclusive: U.S. warns governments, firms against aiding Iran fuel shipments to Venezuela - envoy

Seeking to deter further shipments of Iranian fuel to Venezuela, the Trump administration has quietly warned foreign governments, seaports, shipping companies and insurers that they could face stiff U.S. sanctions if they aid the tanker flotilla, the U.S. envoy on Venezuela told Reuters on Friday. Elliott Abrams, Washington's special representative on Venezuela, said the pressure campaign targeting heavily sanctioned U.S. foes Iran and Venezuela was being waged "to be sure everyone recognizes this would be a very dangerous transaction to assist."

English court to weigh recognition of Maduro, Guaido in Venezuela gold case
English court to weigh recognition of Maduro, Guaido in Venezuela gold case

An English court on Thursday said it would need to decide which of Venezuela's dueling political factions to recognize before ruling on President Nicolas Maduro's request for the Bank of England to hand over gold the country has in its vaults. Venezuela for decades stored gold that makes up part of its central bank reserves in the vaults of foreign financial institutions including the Bank of England, which provides gold custodian services to developing countries. The bank since 2018 has refused to transfer the funds to Maduro's government, which Britain does not recognize.

Failed Maduro coup leader flew on pro-govt magnate
Failed Maduro coup leader flew on pro-govt magnate's plane
  • World
  • 2020-05-28 04:17:47Z

It was mid-January and Jordan Goudreau was itching to get going on a secret plan to raid Venezuela and arrest President Nicolás Maduro when the former special forces commando flew to the city of Barranquilla in Colombia to meet with his would-be partner in arms. To get there, Goudreau and two former Green Beret buddies relied on some unusual help: a chartered flight out of Miami's Opa Locka executive airport on a plane owned by a Venezuelan businessman so close to the government of the late Hugo Chávez that he spent almost four years in a U.S. prison for trying to cover up clandestine cash payments to its allies. The owner of the Venezuela-registered Cessna Citation II with yellow and...

Venezuela
Venezuela's Maduro vows to raise gasoline price as Iranian tanker nears

Venezuelan President Nicolas Maduro on Wednesday pledged to begin charging citizens for gasoline, as the fourth cargo of a five-tanker flotilla bringing fuel from Iran approached the South American nation's exclusive economic zone. Iran is providing the country with up to 1.53 million barrels of gasoline and components to help it ease an acute scarcity that has forced Venezuelans to wait in hours-long lines at service stations or pay steep prices on the black market. With the arrival of the gasoline, Maduro said he would end the policy of providing fuel effectively for free after more than two decades of frozen pump prices.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business