Venezuelan military chases oil and opposition

OREANDA-NEWS. September 02, 2016. Venezuela military is seeking to burnish its oil credentials while cracking down on government opponents.

Pacific Rim Energy, a start-up company with close ties to the Venezuelan government, said today it signed a 25-year "concession" with the new military-run oil, gas and mining company Camimpeg to reactivate oil fields in the eastern states of Sucre and Monagas.

PRE issued the statement on the same day of massive opposition protests in Caracas and other Venezuelan cities. Protestors are demanding a timetable to conduct a referendum to revoke the presidency of Nicolas Maduro.

Heavily armed troops and tanks are deployed across urban areas of the country. Roads and tunnels leading to Caracas have been blocked in an apparent effort to keep Venezuelans from joining the demonstrations. Air transportation has also been disrupted. In recent days, several opposition leaders were rounded up by the Sebin intelligence service, according to those groups. Maduro yesterday threatened to issue a decree to revoke the immunity of assembly leaders.

The atmosphere in Caracas was tense with some clashes, but the march today was largely peaceful. A separate pro-government march was dwarfed by the protesters.

Against this tumultuous backdrop, PRE touted the potential of the new agreement, which it said features a 20pc royalty. Citing statistics from Venezuelan state-owned oil company PdV, PRE said the fields hold 9.6bn bl of crude, and can be developed at \\$8-\\$10/bl, with revenue to be paid into a foreign escrow account.

"Reactivation of wells will start within 60 days. PRE is seeking interested E&P Partners/Operators and Investors to participate in this opportunity," the company said.

PRE told Argus in July that it is seeking partners to market Camimpeg assets, including petroleum coke.

The office of Henry Ramos Allup, president of the opposition-controlled National Assembly, said the agreement is illegal and unconstitutional, because the military is not authorized to sign oil agreements. PRE itself is a target of investigation in the assembly. PRE, whose US-based representative has a generic email account, could not be reached for comment.

PdV?s crude production is sliding because of sparse upstream investment. Argus estimates output is running around 2mn b/d, roughly 300,000 b/d below official figures.

The government relies on oil exports for nearly all of its revenue. The plunge in oil prices since 2014 and tight government controls have virtually paralyzed the economy. A central bank economist told Argus yesterday GDP contracted by an estimated 19pc in the second quarter of 2016.