Eni Expands Venezuela Operations in Bid to Recover Over $2.3 Billion in Debt

Italian oil and gas company Eni has signed a significant new agreement with Venezuela's state-owned Petróleos de Venezuela, S.A. (PDVSA) to develop a major heavy oil project. The deal is viewed as a strategic maneuver by Eni to improve its chances of recovering more than $2.3 billion in accumulated debt owed by the South American nation.

Details of the Junin 5 Agreement

The agreement, signed this week, centers on the development of the giant Junin 5 heavy oil project located in Venezuela's Orinoco Belt. According to a Reuters report, the deal converts Eni's existing stake into a 25-year production-sharing agreement, with Eni assuming the role of field operator. The companies plan to invest approximately $1.5 billion annually in the project.

Key projections for the Junin 5 field include:

• Current production: 12,000 barrels per day (bpd).
• Target production: 400,000 bpd by 2030.

Following a signing ceremony in Caracas, Eni Chief Executive Claudio Descalzi stated that work would commence immediately, with the first well to be drilled the following day, as reported by Reuters.

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After nearly three decades of operations in Venezuela, Eni's decision to deepen its commitment comes as Washington and Caracas move to reopen the country's oil sector. An Eni spokeswoman said the deal will provide "opportunities for value creation for the country and for the gradual recovery of outstanding receivables."

In addition to the $2.3 billion owed directly to Eni, Venezuela also owes $400 million to a natural gas joint venture at the Perla field, which Eni co-owns with Spain's Repsol. Analysts at Barclays noted, "We see the deal as an opportunity to unlock future production and recover existing receivables."

Broader Context and Future Prospects

The move represents a calculated risk for Eni, which has continued operating in Venezuela despite political instability, economic collapse, and U.S. sanctions that previously halted payments from PDVSA. The new pact is part of a broader U.S.-backed effort to revive Venezuela's struggling oil industry.

Davide Tabarelli, head of energy consultancy Nomisma Energia, told Reuters that projects which risked becoming stranded assets can now contribute to Eni's portfolio and support production growth. Eni's current output in Venezuela is around 64,000 barrels of oil equivalent per day (boepd), with industry sources suggesting this could eventually rise to 1 million boepd.