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

Dubai: XRG, ADNOC's global energy investment arm, is set to expand its footprint in Venezuela by acquiring a stake in the offshore Loran gas licence. This move grants the Abu Dhabi-based firm access to one of Latin America's most promising undeveloped gas reserves, bolstering its rapidly expanding international gas portfolio. The investment is contingent on regulatory clearances and, upon approval, will see XRG share an equal interest with bp and UCC in the license, which encompasses over 4 trillion cubic feet (Tcf) of confirmed gas reserves.

This strategic move represents XRG's debut in Venezuela and augments its existing gas portfolio that stretches across the US, Argentina, Egypt, Azerbaijan, Turkmenistan, and Mozambique. The significance of Loran extends beyond its sheer size, as it is in close proximity to existing gas and liquefied natural gas (LNG) infrastructure in Trinidad and Tobago, potentially facilitating the export of Venezuelan gas to international markets without the need for the construction of a new export system.

Loran is a key component of the larger Loran-Manatee offshore gas accumulation, which straddles the maritime boundary between Venezuela and Trinidad and Tobago. Independent estimates place the combined Loran-Manatee resource at around 10 Tcf, with approximately 7.3 Tcf attributed to Venezuela's Loran share and roughly 2.7 Tcf to Manatee in Trinidad and Tobago's waters.

The two nations agreed in 2019 to allow each party to develop its respective portion independently, eliminating one of the obstacles that had hindered the exploitation of this cross-border resource. For XRG, this development opens up the prospect of linking a substantial undeveloped Venezuelan resource with the existing processing and export facilities in the Atlantic Basin.

Venezuela possesses considerable gas resources and has the potential to play a more prominent role in meeting regional and global energy demand. Mohamed Al Aryani, President of International Gas at XRG, commented, "Venezuela's entry through Loran underscores our approach to investing with partners in advantaged resources with access to established infrastructure and clear market routes."

This transaction also illustrates XRG's strategy in assembling its international gas business. The company has been acquiring positions in diverse gas-producing and liquefied natural gas (LNG) markets, including Rio Grande LNG in the US and Argentina LNG, pending regulatory approvals. XRG also holds stakes in Egypt through Arcius Energy, Azerbaijan via the Absheron gas field and the Southern Gas Corridor, an offshore block in Turkmenistan, and Area 4 in Mozambique.

Loran bolsters XRG's gas presence in the Atlantic Basin, adding a Venezuelan stake to its international gas network and enhancing its exposure to the Atlantic Basin. The geographical diversification of XRG's gas portfolio is crucial for a company aiming to build a robust international gas platform. While gas resources are an essential aspect of a project's economics, access to pipelines, liquefaction plants, and customers can be equally vital, as constructing new LNG export infrastructure can demand billions of dollars and years of construction time.

XRG specifically highlighted Loran's proximity to established infrastructure and possible market access routes as a key factor in its investment decision. By connecting Venezuelan gas with existing infrastructure, XRG aims to facilitate responsible resource development, enhance regional energy integration, and generate long-term value for Venezuela, its partners, and local communities.