Adnoc's XRG enters Venezuela with stake in major offshore gas licence

Dubai: XRG, ADNOC’s international energy investment company, is entering Venezuela through an interest in the offshore Loran gas licence, giving the Abu Dhabi-based company exposure to one of Latin America’s significant undeveloped gas resources and extending its rapidly growing international gas portfolio.

XRG said on Thursday it had been awarded an interest in the Loran licence by Venezuela, alongside a transfer of interest by state-owned PDVSA Gas. Subject to regulatory approvals, XRG will hold an equal interest alongside bp and UCC in a licence containing more than 4 trillion cubic feet (Tcf) of proven gas resources.

The investment marks XRG’s entry into Venezuela and adds another major geography to a gas portfolio that already stretches across the US, Argentina, Egypt, Azerbaijan, Turkmenistan and Mozambique.

Its importance goes beyond the size of the resource. Loran sits close to established gas and LNG infrastructure in Trinidad and Tobago, potentially giving Venezuelan gas a route to international markets without requiring an entirely new export system to be built from scratch.

Loran forms the Venezuelan portion of the wider Loran-Manatee offshore gas accumulation, which crosses the maritime boundary between Venezuela and Trinidad and Tobago.

Independent estimates have historically put the combined Loran-Manatee resource at around 10 Tcf, with roughly 7.3 Tcf attributed to Venezuela's Loran portion and about 2.7 Tcf to Manatee in Trinidad and Tobago waters. An IMF assessment cited the same breakdown.

The two countries agreed in 2019 to allow each side of the accumulation to be developed independently, removing one of the complications that had held back exploitation of the cross-border resource.

That makes the infrastructure on the Trinidad side particularly relevant.

Trinidad and Tobago already has a mature gas industry, including LNG and petrochemical facilities. The country has also been seeking additional supplies as declining domestic gas production has left some of that infrastructure short of feedstock.

For XRG, this creates the possibility of linking a large undeveloped Venezuelan resource with existing processing and export capacity elsewhere in the Atlantic Basin.

"Venezuela holds significant gas resources and has the potential to play a greater role in meeting regional and international energy demand," Mohamed Al Aryani, President, International Gas at XRG, said.

"Our entry through Loran reflects XRG’s strategy to invest with partners in advantaged resources with access to established infrastructure and clear routes to market."

The transaction also shows how XRG is assembling its international gas business.

Rather than concentrating its investments in one producing region, the company has been acquiring positions across several major gas-producing and LNG markets.

Its portfolio includes Rio Grande LNG in the US and Argentina LNG, with the latter subject to regulatory approvals. It also has exposure to Egypt through Arcius Energy, Azerbaijan through the Absheron gas field and Southern Gas Corridor, Offshore Block 1 in Turkmenistan and the Area 4 concession in Mozambique.

Loran adds a Venezuelan position to that network and strengthens XRG's exposure to the Atlantic Basin.

That geographical spread matters for a company seeking to build an international gas platform. Gas resources themselves are only one part of the economics of a project. Access to pipelines, liquefaction plants and customers can be just as important because new LNG export infrastructure can require billions of dollars and years of construction.

XRG specifically identified Loran's access to established infrastructure and potential routes to market as part of the rationale for the investment.

"By connecting Venezuelan gas with established infrastructure, we aim to support the responsible development of these resources, strengthen regional energy integration and create long-term value for Venezuela, our partners and local communities," Al Aryani said.