MIAMI– A company founded by a billionaire Texas oilman announced a deal Wednesday with Venezuela’s state oil company to rehabilitate five aging oil fields, days after the Biden administration put the brakes on sanctions relief over concerns about the fairness of the upcoming presidential elections in the country.
LNG Energy Group is a Canadian publicly traded company that produces natural gas in Colombia. It was formed last year as a result of a merger with a company owned by Rod Lewis, a legendary Texas wildcatter whom Forbes Magazine once called the “only gringo allowed to drill in Mexico.”
As part of the deal announced Wednesday, LNG was awarded contracts from state-owned PDVSA to take over production and develop two oil fields in eastern Venezuela, which currently produce about 3,000 barrels of crude oil per day.
LNG said the deal was carried out as part of sanctions relief announced last year by the US government in support of an agreement between President Nicolas Maduro and his opponents to hold competitive presidential elections this year. Last week, the Biden administration reimposed sanctions as hopes for a democratic opening in Venezuela faded.
However, the White House left open the option for companies to apply for licenses exempting them from the restrictions, something that could attract investment in a country that has the world’s largest oil reserves, at a time of growing concerns about energy supplies in the aftermath of the Russian crisis. invasion of Ukraine.
Aside from Chevron, which has been operating in Venezuela for a century and was granted its own license in 2022, few U.S. companies have been willing to make major capital investments in the high-risk South American country in recent years due to concerns about seizure by the U.S. government . sanctions and corruption.
“This will be a test for U.S. sanctions whether they are authorized or not,” said Francisco Monaldi, an expert on Latin American energy policy at Rice University’s Baker Institute.
LNG said in a statement that it “intends to operate in full compliance with applicable sanctions,” but declined further comment
Lewis, who Forbes estimates has a net worth of $1.1 billion, became wealthy in the 1980s while drilling for natural gas near his home in Laredo, Texas. His company, Lewis Energy Group, was the state’s fourth-largest natural gas producer last year.
In 2004, Lewis was awarded a contract by Mexico’s tightly controlled energy industry for nearly 250 square miles, just across the border from his plant in South Texas. He started investing in Colombia in 2003.
In October, the US granted Maduro’s government sanctions relief on the state-run oil, gas and mining sectors after agreeing to work with opposition figures to hold free and competitive presidential elections this year.
While Maduro subsequently scheduled elections for July and invited international observers to monitor the vote, his inner circle has used the ruling party’s total control over Venezuelan institutions to undermine the deal. Actions include blocking his main rival, ex-lawmaker Maria Corina Machado, from registering her candidacy or that of a designated alternative. Numerous government critics have also been jailed in the past six months, including several of Machado’s aides.
