Venezuela to Hand Seized Conoco Assets to Little-Known Firm

An oil drilling tower stands at a Petroleos de Venezuela SA (PDVSA) facility in the Orinoco Belt of El Tigre, Venezuela, on Friday, Oct. 12, 2018. State-owned PDVSA doesn’t publish statistics, but environmentalists and analysts keep seemingly endless lists of examples of wayward crude – unleashed by busted valves, ripped gaskets, and cracked pipes – that they say has polluted waterways and farmland and probably has seeped into the nation’s aquifers.

(Bloomberg) — Venezuela plans to tap a little-known firm to take on key fields and facilities that were once operated by ConocoPhillips as it moves quickly to ink deals ahead of a deadline for the US to decide whether to reinstate sanctions.

Venezuelan firm A&B Investments will partner with Petróleos de Venezuela to run heavy oil fields in the Orinoco Belt and an associated processing facility, according to people familiar with the negotiations who asked not to be named because discussions are ongoing.

The expected deal comes on the eve of a Thursday deadline for the expiration of US sanctions relief. If restrictions are reimposed, it would close the door for players looking to enter the South American country and could usher in a return to Trump-era restrictions on PDVSA’s oil activities. The US Biden administration has reiterated its stance that President Nicolas Maduro has failed to follow through on commitments reached in October for democratic conditions for the presidential elections on July 28, including allowing all candidates to run.

The new joint venture will be called Roraima, which is the name of a Brazilian state. A Brazilian firm is behind the financing, two of the people said, without disclosing details.

Venezuelan businessman Jorge Silva Cardona, who leads A&B, has a history of doing business with Brazilian firm J&F Investimentos SA, the holding company of the billionaire Batista family that owns the world’s largest meat producer, JBS SA. For instance, Silva worked with the Batistas in the 2010s to import chicken and beef to Venezuela, according to the investigative news outlet Armando Info.

A spokesperson for J&F confirmed Silva is a “commercial representative” for J&F and said he offers “investment opportunities for the group and shareholders to evaluate in Venezuela.” Silva said in late March that A&B has presented proposals related to natural resources to several parties, though he declined to offer specifics as none of the deals had closed at that time.

J&F and Silva didn’t immediately reply to a request for comment, while PDVSA declined to comment.

Roraima is expected to take on the Petro San Felix assets, including a port, which late president Hugo Chavez expropriated from ConocoPhillips in 2007. Its fields and upgrader subsequently fell into disrepair after the country suffered an economic collapse and came under US sanctions.

A&B’s plan targets production of 90,000 barrels a day within two years and calls for investments of $600 million for the upgrader. The venture was approved by the National Assembly on Tuesday, though terms of the deal have yet to be signed by PDVSA authorities.

–With assistance from Clarice Couto.

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