(Bloomberg) – The United Arab Emirates’s state oil giant is evaluating options for a potential entry into Venezuela’s energy industry as the Middle Eastern country seeks to build out its international natural gas business, according to people with knowledge of the situation.
Image: ADNOC
Abu Dhabi National Oil Co. is watching developments in Venezuela, with interest in partnering with another international producer on gas projects, according to the people who asked not to be identified discussing confidential plans. The company’s interest is preliminary and would depend on clear legal and financial structures for investment in the South American country, the people said.
Entering Venezuela would require political coordination with the U.S. following the stunning capture of the South American nation’s leader Nicolas Maduro by President Donald Trump’s administration. Trump has been exhorting U.S. oil firms to return to Venezuela and increase production, but some firms including Exxon Mobil Corp. and France’s TotalEnergies SE have been skeptical about a quick ramp up.
Any approach by ADNOC in Venezuela would be made via XRG, its international investment arm, according to the people. The company said Thursday that it doesn’t comment on market speculation.
For XRG, an entry into Venezuela would be another push into gas worldwide. The company has made the fuel a cornerstone of its multibillion-dollar overseas expansion plans, with talks ongoing for a stake in an LNG project in Argentina following deals in the U.S., Africa and Central Asia.
Abu Dhabi is betting on lasting demand for gas and chemicals as the energy transition is expected to slow growth in oil consumption over the next few decades. Backed by the emirates’s oil wealth, XRG bought a stake in NextDecade Corp.’s Rio Grande LNG project being built in South Texas, and last year completed its acquisition of Germany’s Covestro AG.
XRG is looking for supplies that can easily reach Asia after last year dropping a $19 billion offer for Australia’s Santos Ltd. that would’ve catapulted it into the top ranks of LNG producers.
Seeking partner
In Venezuela, the company would seek to partner with another international company with regional expertise. In return, XRG would bank on Abu Dhabi’s huge oil earnings to finance the billions of dollars needed to revive Venezuela’s production.
While primarily known for its vast oil deposits, Venezuela has more than two-thirds of South America’s gas reserves, according to the U.S. Energy Information Administration. Much of that is what’s called associated gas, which is produced as part of oil output. Some companies already have projects to utilize that fuel, but most of it is currently burned off.
Even before Trump’s latest move on Venezuela, Shell Plc was preparing plans to revamp a field in the country after a stop-start series of agreements and sanctions. Developing the Venezuelan resources could also allow the European company, which is already working with ADNOC on gas processing and an LNG export facility in the country, to feed a terminal in neighboring Trinidad and Tobago.
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