TotalEnergies, Equinor exit Venezuela upgrader: Update

Adds companies' remaining gas assets.

TotalEnergies and Norway's state-controlled Equinor have exited the 190,000 b/d Venezuelan heavy-crude upgrading venture PetroCedeño, transferring their stakes 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.

TotalEnergies and Equinor still have natural gas assets in Venezuela. These include the undeveloped Cocuina license in Deltana platform block 4, in which Equinor holds 51pc and TotalEnergies 49pc. TotalEnergies also has a 69.5pc operating stake in the mature Yucal Placer dry gas field. The French company said less than 0.5pc of its combined oil and gas production in 2020 came from Venezuela.

Venezuela's government described the withdrawal from PetroCedeño 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 the 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, Patricia Garip and Konstantin Rozhnov