Energy

Total, Equinor exit Venezuela oil venture, citing carbon intensity

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Equinor's logo is seen at the company's headquarters in Stavanger, Norway December 5, 2019. REUTERS/Ints Kalnins

CARACAS/OSLO, July 29 (Reuters) - Norway's Equinor (EQNR.OL) and France's TotalEnergies (TTEF.PA) have agreed to sell their stakes in Venezuela's Petrocedeno project to a unit of state oil firm PDVSA, which will become the sole owner, Equinor and Venezuela's government said on Thursday.

The exit comes as U.S. sanctions meant to force President Nicolas Maduro from power have complicated western oil companies' ability to operate in the OPEC nation. Total's chief executive cited the project's carbon intensity as the principal reason for the move.

Total and Equinor held 30% and 10% in the venture, respectively, which included a heavy crude field in the Orinoco oil belt and an upgrader that converted the crude into exportable grades.

"Following an important and harmonious negotiation for the acquisition of 100% of the shares of the mixed company Petrocedeno, Venezuela is now the sole proprietor of one of the most powerful companies in Latin America," PDVSA and the oil ministry said in a joint statement.

The statement added that Total and Equinor made the decision "in line with the transformation of their business models on a global level in the context of the energy transition and the development of clean energy."

Separately, TotalEnergies confirmed the transaction and said it would mean a loss of $1.38 billion for the French company. Chief Executive Patrick Pouyanné said PDVSA offered Total an opportunity to exit "for a symbolic amount" but that the company was indemnified from all past and future liabilities.

Pouyanné said the decision was not driven by Venezuela's political situation or sanctions, though he acknowledged they did "not make our life very easy". He said drilling new wells and repairing the upgrader would have required significant capital expenditure, which was not in line with Total's carbon goals. read more

"Clearly, allocating CapEx to the development of extra heavier projects in the Orinoco Belt will not be consistent with our hydrocarbon state strategy in terms of CO2 intensity of new hydrocarbon CapEx," Pouyanné told analysts in an earnings call on Thursday.

Equinor said the transaction supports its "corporate strategy to focus its portfolio on international core areas and prioritised geographies where Equinor can leverage its competitive advantages."

Total and Equinor have separate licenses to produce natural gas in Venezuela, which they will not be exiting.

Petrocedeno produced around 14,000 barrels per day (bpd) in May, according to internal PDVSA documents seen by Reuters, whereas joint ventures in the Orinoco belt part-owned by Chevron and China's CNPC each produced more than 50,000 bpd.

That was also a fraction of the 100,000 bpd the venture produced in 2017, according to the U.S. Energy Information Administration, in line with a general collapse of PDVSA's crude output after years of underinvestment and lack of maintenance in the crisis-stricken OPEC nation's oil sector.

Reporting by Luc Cohen in Caracas and Terje Solsvik in Oslo; Editing by Jason Neely, Mike Harrison and David Evans

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