TotalEnergies, Equinor exit Venezuela upgrader: Update

Market: Crude oil
29/07/21

Adds Venezuelan comment and context from paragraph 3 onwards

TotalEnergies and Norway's state-controlled Equinor will exit a Venezuelan heavy-crude upgrading venture. Their stakes in the 190,000 b/d PetroCedeño facility will be transferred to majority partner state-owned PdV.

TotalEnergies said today that it took an exceptional capital loss of $1.38bn during the quarter as a result. Equinor confirmed the transaction but did not give financial details. The former held 30.3pc in PetroCedeño and the latter 9.7pc. PdV is now the sole owner.

The withdrawal is something of a formality, because the facility has been off line for years. The move nonetheless diminishes the limited presence of western oil companies in Venezuela's once-thriving oil industry, and could be a grim bellwether for a country whose main resource is now difficult for most investors to square with energy transition strategies.

Venezuela's government described the withdrawal in sovereign terms, resulting from "an important and harmonious negotiation" that gives the Opec country full control of "one of the most powerful companies in Latin America".

PdV's joint venture subsidiary CVP will now work to reactivate the joint venture, the oil ministry said, adding that the two European companies remain interested in Venezuela.

PetroCedeño is one of four integrated projects built by international oil companies in the late 1990s to upgrade extra-heavy crude from Venezuela's vast Orinoco oil belt into lighter synthetic crude for export. The government of late president Hugo Chavez nationalized the upgraders in 2007, and all but PdV's PetroPiar venture, with minority partner Chevron, are out of service or operating as simpler blending facilities.

Venezuela's oil industry has deteriorated after years of scant maintenance and investment. US oil sanctions imposed in early 2019 have accelerated the downturn.

Two other European companies that are still active in Venezuela are Spain's Repsol and Italy's Eni. Their main asset is the Cardon 4 offshore gas venture.

By Ben Winkley and Patricia Garip

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