Putin Approves Rosneft’s Venezuela Shale Gas Project

Russian President Vladimir Putin has approved the government’s proposal to support shale gas projects in Venezuela by Russia’s biggest oil company, Rosneft, Vesti Finance reports.

The president signed a protocol on making amendments to the agreement with the country on cooperation in the sphere of implementing joint strategic projects. His order was published on the official website of legal information.

The Russian government earlier suggested to add Rosneft’s gas projects in Venezuela to the agreement between Moscow and Caracas. According to the document, Russia and Venezuela will create favorable and non-discriminatory conditions and provide assistance to Rosneft and its subsidiary GrupoRosneft S.A. in the implementation of the project on developing shale gas in Venezuela’s Patao and Mejillones.

The document also says that Venezuela will not tax Rosneft, as well as its suppliers and contractors.

At the end of 2017, the Venezuelan authorities provided Rosneft’s subsidiary with a license for developing shale gas in Patao and Mejillones for 30 years. It was also planned to establish a joint company with PDVSA to extract, process and monetize natural gas from these deposits. The target output is 6.5 billion cubic meters of gas per year for 15 years.

Rosneft has poured around $9 billion into Venezuelan projects since 2010 but has yet to break even, Reuters has calculated, based on Rosneft’s annual reports, its public disclosures and the internal documents.

The story of Rosneft’s troubled partnership with state-owned PDVSA comes at a time of deepening crisis inside Venezuela’s giant oil company. The country’s fortunes are closely tied to those of PDVSA, which accounts for 90 percent of the nation’s export revenues, Reuters wrote in March.