US and Venezuela probe secret oil contracts signed under Maduro

07:50

By: Dakir Madiha

US and Venezuela probe secret oil contracts signed under Maduro

Authorities in the United States and Venezuela are reviewing dozens of confidential oil agreements signed during the rule of former leader Nicolás Maduro, according to Bloomberg, as part of an investigation that could complicate efforts to revive the country’s struggling oil sector.

The agreements, known as productive participation contracts, allowed investors to extract and market crude oil while keeping their identities undisclosed. The arrangement was designed to shield participants from US sanctions targeting Venezuela’s oil industry.

The contracts also enabled the Maduro government to work with private companies despite legal restrictions limiting oil sales by non state actors.

Under pressure from the Trump administration, Venezuelan authorities have launched an audit of companies involved in the agreements, while US officials are examining export documentation linked to the deals.

Interim president Delcy Rodriguez said there were 31 such agreements in total. However, only a limited number are currently producing oil. Eight contracts were pumping a combined average of about 210,000 barrels per day in mid February, according to documents reviewed by Bloomberg.

Earlier this year, Venezuela’s oil ministry suspended 19 production sharing contracts as part of the review process, Reuters reported. The suspension has not yet affected national oil and gas output, as the state company PDVSA continues selling crude produced under the suspended deals while investigations proceed.

The contracts involve projects in some of Venezuela’s key oil regions, including Lake Maracaibo and the Orinoco Belt. Companies connected to the agreements include firms from China, the United States, South America and Venezuela, along with entities registered in offshore financial centers.

Officials in both Caracas and Washington are assessing whether some of the contracts should be canceled entirely.

The investigation has raised concerns about the potential impact on efforts to rebuild Venezuela’s oil production. Juan Fernández, a former PDVSA executive who now advises opposition leader Maria Corina Machado on energy policy, said there are significant concerns about how the agreements were originally awarded. However, he added that maintaining current production remains essential for the country.

On March 3, PDVSA announced new supply agreements with companies trading crude oil and refined products destined for the United States. The announcement came only days after Rodriguez called for contracts signed under Maduro to be honored.

Meanwhile, Venezuela’s National Assembly approved amendments to the country’s hydrocarbons law in late January, giving the government six months to review existing contracts.

Chevron, the only major US oil company still operating in Venezuela, is in discussions with the oil ministry and PDVSA about expanding its existing joint ventures.

According to Theodore Kahn, a director at Control Risks in Bogotá, Venezuelan heavy crude used by refineries along the US Gulf Coast has become increasingly strategic as global supply uncertainties persist.