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

The company's technology extracts critical minerals like iodine, lithium and copper from oilfield-produced water. Photo courtesy Altillion

Houston-based startup Altillion has secured $5 million in seed funding to accelerate the commercialization of its proprietary IRIS and ALIX technologies, which convert oilfield-produced water into valuable minerals.

San Francisco-based EIC Rose Rock and Houston-based Flathead Forge led the round. Altillion says the funding will go toward pilot facilities and commercial deployments as the company looks to scale in the U.S.

“Altillion’s efficient and scalable technologies are needed more than ever to reshape critical mineral recovery and facilitate beneficial use of oilfield brines,” Jay Keener, Altillion’s CEO and co-founder, said in a news release. “We’re uniquely positioned to provide a stable, domestic supply of the critical minerals needed for electronics, batteries, healthcare and national defense technologies. This investment from EIC Rose Rock and Flathead Forge enables us to strategically accelerate this impact and is very timely given the current geopolitical dynamics.”

Altillion's IRIS and ALIX platforms extract minerals like iodine, lithium and copper from oilfield-produced water, geothermal brines and salars. This process allows companies to unlock new sources of revenue while also boosting the domestic critical minerals supply chain. The company announced earlier this summer that it will launch a feasibility project in the Permian Basin and aims to develop a path to commercial-scale implementation in the field.

“We are excited to partner with Altillion to scale and deploy these world-class technologies to access the vast wealth hidden in wastewater,” David Clouse, Managing Director of EIC Rose Rock, added in the release. “With Altillion, we’re expanding our ability to empower the energy industry to domestically source the critical minerals America needs for a robust economy and supply chain.”

Altillion was founded by Keener and COO Scott Buckwald in 2023. Keener previously founded KDH Trading, where Buckwald also serves as COO, according to his LinkedIn page.

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