Italian energy firm Eni is significantly expanding its presence in Venezuela through several new projects and agreements. The company is actively negotiating contracts for the Junín-5 and Corocoro oil developments and has finalized an export deal for natural gas from the giant Perla field, one of Venezuela's largest natural gas assets. Eni's CEO Claudio Descalzi confirmed positive progress in talks with Venezuela's energy ministry and the national oil company PDVSA, noting that Eni is sharing its strategy with US partners. Eni's Venezuelan assets hold recoverable resources exceeding 5.5 billion barrels, and PDVSA owes the company roughly $3 billion in outstanding receivables.
Eni's efforts are part of a broader push by the Trump administration to increase US involvement in Venezuela's oil industry. The US proposes controlling 55% of the output from joint ventures covering fields with proven reserves totaling 65 billion barrels, representing over one-fifth of Venezuela's known oil. This strategy aims to process millions of barrels of new Venezuelan output through US refineries and support significant investment and job creation in the United States, with a guaranteed right to buy 20% of the output at cost.
While US Energy Secretary Chris Wright stated that upcoming oil deals, including those involving Eni, Chevron, ONGC, GeoPark, and GE Vernova, are expected to more than double Venezuela's crude production in the next few years, analysts are skeptical about the immediate impact on global oil prices. US crude prices have actually risen since the deal was announced, with WTI pushing past $90 and Brent topping $95 per barrel, primarily due to geopolitical risks and Middle East supply disruptions. Experts like Johannes Rauball from Kpler indicate that it will take years for these deals to result in meaningful production increases due to Venezuela's severe physical bottlenecks and aging infrastructure, such as degraded pipeline systems and insufficient electrical grid support. Similarly, Tracy Shuchart of NinjaTrader noted that easy barrels are already back, and significant ramp-ups will take decades.
Despite the long-term potential for increased supply to exert downward pressure on global oil prices, near-term price relief at the pump in the US is unlikely due to refining throughput constraints and ongoing operational delays. US refiners are already operating at maximum capacity, and while Venezuelan heavy crude is suitable for US Gulf Coast refiners, this access alone will not translate to immediate lower fuel prices. Some analysts, like Frederic Schneider, also express reservations about other oil companies rushing to invest heavily in Venezuela given the high risks and uncertain demand forecasts, especially with Middle East oil expected to come back online. However, US oil companies, particularly Chevron, are expected to be major beneficiaries, with Chevron's shares rising 2.2% to $206.20 after the deal announcement.
