dealmaker

Billionaire Texas oilman inks deal with Venezuela's state-run oil giant as U.S. sanctions loom

As part of the deal announced Wednesday, LNG was awarded contracts by state-run PDVSA to take over production and develop two oil fields in eastern Venezuela that currently produce about 3,000 barrels of crude per day. Photo via Getty Images

A company started by a Texas billionaire oilman announced a deal Wednesday with Venezuela's state-owned oil company to rehabilitate five aging oil fields, days after the Biden administration put a brake on sanctions relief over concerns about the fairness of the country's upcoming presidential election.

LNG Energy Group is a publicly traded company listed in Canada that produces natural gas in Colombia. It was created last year as a result of a merger with a company owned by Rod Lewis, a legendary Texas wildcatter who Forbes Magazine once called the “only gringo allowed to drill in Mexico."

As part of the deal announced Wednesday, LNG was awarded contracts by state-run PDVSA to take over production and develop two oil fields in eastern Venezuela that currently produce about 3,000 barrels of crude per day.

LNG said the deal was executed within the framework of sanctions relief announced by the U.S. government last year in support of an agreement between President Nicolas Maduro and his opponents to hold a competitive presidential election this year. Last week, the Biden administration reimposed sanctions as hopes for a democratic opening in Venezuela fade.

However, the White House left open the possibility for companies to apply for licenses exempting them from the restrictions, something that could attract investment to a country sitting atop the world's largest petroleum reserves at a time of growing concerns about energy supplies in the wake of Russia's invasion of Ukraine.

Other than Chevron, which has operated in Venezuela for a century and was awarded its own license in 2022, few American companies have been looking to make major capital investments in the high risk South American country in recent years because of concerns about government seizure, U.S. sanctions and corruption.

“This will be a test of U.S. sanctions whether they get a license 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 the applicable sanctions" but declined further comment

Lewis, who Forbes estimates has a net worth of $1.1 billion, struck it rich in the 1980s as a wildcatter drilling for natural gas near his home in Laredo, Texas. His company, Lewis Energy Group, was the state's fourth biggest natural gas producer last year.

In 2004, Lewis was awarded a contract by Mexico's tightly controlled energy industry covering almost 100,000 acres (400 square kilometers) just across the border from his south Texas facility. He started investing in Colombia in 2003.

In October, the U.S. granted Maduro’s government relief from sanctions on its state-run oil, gas and mining sectors after it agreed to work with members of the opposition to hold a free and competitive presidential election this year.

While Maduro went on to schedule an election for July and invite international observers to monitor voting, his inner circle has used the ruling party’s total control over Venezuela’s institutions to undermine the agreement. 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 over the past six months, including several of Machado’s aides.

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A View From HETI

Alléo Energy is moving its headquarters to The Ion District. Photo courtesy of The Ion

An Alabama-based clean tech company is moving its headquarters to Houston.

Alléo Energy announced that it will move its headquarters from Bay Minette, Alabama, to Houston's Ion District. The company develops carbon-negative fuels and renewable commodities through its conversion technology that turns wood waste and cellulosic feedstocks into high-energy, high-yield syngas.

The news comes after Alléo announced the appointment of Benjamin Cowart as its new CEO. Cowart will succeed Alléo founder Simeon Chow, who will serve as president.

“Ben doesn’t need to be sold on carbon-negative fuels; he’s already building in this exact space, and he’s thrived through some of the hardest conditions the industry has faced,” Chow said in a news release. “He knows how to scale and he knows the capital markets that finance them; he turns the hurdles that stall other companies into momentum. Bringing a leader of his caliber in as CEO is a defining, energizing moment.”

Cowart previously founded Houston-based renewables Vertex Energy Inc. The company went public on the Nasdaq exchange in 2009 through a reverse merger. He served as chairman and CEO of the company, which was later taken private by a consortium led by BlackRock.

Cowart also founded EVH Corp., a venture platform focused on building in hydrogen, methanol, sustainable aviation fuel (SAF), and low-carbon marine fuels.

“I’ve spent my career turning advanced process technology into high-performing enterprises that deliver both economic and environmental returns in an industry defined by headwinds,” Cowart added in the release. “The winners in energy transition aren’t the ones with the best headline; they’re the ones that keep their economics intact when subsidies move, feedstock prices swing, and capital gets expensive. Alléo is well-built for that. I’ve rarely seen a technology company this well positioned for what the market is demanding. The science is proven; now it’s about disciplined execution, financing, and building more plants. This is the work I love most.”

Alléo plans to scale its proprietary conversion technology. The company commissioned the first phase of its Alabama facility in 2023, which produced renewable diesel made entirely from wood waste, which could be converted to SAF.

The company says that it has $50 million invested in initial research and development, and that additional facilities are in the planning stages.

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