Sanctions Eased: Eni to Accept Venezuelan Oil as Payment for Gas

By Francesca Landini

Sanctions Shift and Payment Terms

MILAN, Feb 26 (Reuters) - Venezuela can now pay for gas received from Eni with oil thanks to a recent easing of U.S. sanctions, unlocking a situation that had left the Latin American country with a large debt to the Italian firm, Eni's CEO said on Thursday.

Debt Exposure and Receivables

"That's really a big upside. Before we were stuck for almost one year. That created a build up in our outstanding," Chief Executive Claudio Descalzi said during a post‑results call.

Perla Gas Field and PDVSA Contract

Descalzi, who confirmed that Venezuela owes the Italian group around $3 billion, was referring to natural gas from the Perla offshore field, the only active offshore gas project in Venezuela, which is operated by Eni and Spain's Repsol.

Perla's production is bought by Venezuela's state-run oil company PDVSA under a dollar-denominated contract, with the gas mostly used for domestic power generation.

Dollar‑Denominated Constraints

Because PDVSA was prevented by the sanctions from using dollars for commercial transactions and was excluded from the international financial system, there has been an accumulation of billions of dollars pending to be paid by PDVSA to Eni and Repsol for gas. Recovery of that money has been slow and intermittent since 2019.

Eni also produces crude in the shallow water Corocoro field with PDVSA, whose output has remained at minimum levels since sanctions were imposed in 2019, and with several partners at block Junin 5 in Venezuela's main oil region, the Orinoco Belt.

JV with U.S. Companies

Production Ramp‑Up Plans

"We are working with some American companies to see whether we can create a joint venture to ... grow up production quite quickly," Descalzi said.

Corocoro and Junin 5 Projects

A ramp up in production at the two sites could allow Eni to lift more oil, enabling it to recover the money Venezuela owes to the Italian group more quickly, he added.

Potential Gas Exports to Europe

Eni could eventually export part of the gas produced at the Perla facility to Europe, helping replace liquefied natural gas supplies that previously came from Russia, Descalzi said.

(Additional reporting by Marianna Parraga; Editing by Alvise Armellini and Hugh Lawson)