Private Chinese Firm Producing Oil in Venezuela Under Rare 20-Year Pact

• China Concord Resources Corp (CCRC) has begun developing two Venezuelan oilfields, planning to invest more than US$1Bn in a project to produce 60,000 barrels per day (bpd) of crude oil by the end of 2026. The project marks a rare investment by a private Chinese firm in the Organisation of the Petroleum Exporting Countries (OPEC) country, which has struggled to attract foreign capital due to international sanctions on the administration of President Nicolas Maduro.
• Early last year, CCRC began negotiating its participation in the two oilfields - Lago Cinco and Lagunillas Lago - and signed in May 2024 a 20-year production sharing contract with Venezuela. The contract model, introduced by the Venezuelan government in 2020 under the Anti-Blockade Law to cope with U.S. sanctions, allows investors to act as operators in return for an agreed share of production.
• With no previous oil drilling experience, CCRC has, since last September, sent in around 60 Chinese staff skilled in oilfield development and a Chinese drill rig, aiming to quickly reopen about 100 wells and recover crude output. Production at the two fields, largely mothballed in recent years due to lack of investment and technical expertise, is now running at 12,000 bpd.
• CCRC aims to develop a total of 500 wells and raise output to up to 60,000 bpd by the end of 2026, a mix of light and heavy oil, with light crude to be delivered to state oil company PDVSA and heavier crude destined for China.
• Chinese state oil giant CNPC was among the largest investors in Venezuela's oil sector before U.S. energy sanctions were first imposed on Venezuela in 2019. China was also a big lender to Venezuela. However, since the U.S. imposed energy sanctions, most Chinese state oil firms have stopped lifting oil. Chinese independent refiners, however, continue to buy the oil via traders. Notably, Beijing currently buys more than 90% of Venezuela's total oil exports.

(Source: Reuters)