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

Vema Hydrogen is conducting a pilot for its Engineered Mineral Hydrogen technology. Photo courtesy Vema Hydrogen.

Houston climatech company Vema Hydrogen recently completed drilling its first two pilot wells in Quebec for its Engineered Mineral Hydrogen (EMH) pilot. The company says the project is the first EMH pilot of its kind.

Vema’s EMH technology produces low-cost, high-purity hydrogen from subsurface rock formations. It has the capacity to support e-fuel and clean mobility industries and the shipping and air transport markets. The pilot project is the first field deployment of the company’s technology.

“This pilot will provide the critical data needed to validate Engineered Mineral Hydrogen at commercial scale and demonstrate that Quebec can lead the world in this emerging clean energy category,” Pierre Levin, CEO of Vema Hydrogen, said in a news release.

Levin added that the sample collected thus far in the pilot is “exactly what we expected, and is very promising for hydrogen yields.”

Through the pilot, Vema will collect core samples and begin subsurface analysis to evaluate fluid movement and monitor hydrogen production from the wells. The data collected from the pilot will shape Vema's plans for commercialization and provide documentation for proof of concept in the field, according to the news release.

“Vema Hydrogen perfectly embodies the spirit of the grey to green movement: transforming mining liabilities into drivers of innovation and ecological transition,” Ludovic Beauregard, circular economy commissioner at the Thetford Region Economic Development Corporation, added in the release.

“This project demonstrates that it is possible to reconcile the revitalization of mining regions, clean energy and sustainable economic development for these areas.”

In addition to its pilot in Canada, Vema also recently signed a 10-year hydrogen purchase and sale agreement with San Francisco-based Verne Power to supply clean hydrogen for data centers across California. The company was selected as a Qualified Supplier by The First Public Hydrogen Authority, which will allow it to supply clean hydrogen at scale to California’s municipalities, transit agencies and businesses through the FPH2 network.

Vema aims to produce Engineered Mineral Hydrogen for less than $1 per kilogram. The company, founded in 2024, is working toward a gigawatt-scale hydrogen supply in North America.

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