Private Chinese firm producing oil in Venezuela under rare 20-year pact, source says

China Concord Resources Corp has begun developing two Venezuelan oilfields, planning to invest more than $1 billion in a project to produce 60,000 barrels per day of crude oil by end-2026, an executive directly involved in the project said.

The project marks a rare investment by a private Chinese firm in the OPEC country, which has struggled to attract foreign capital due to international sanctions on the administration of President Nicolas Maduro. The investment figure and the production plan are being reported for the first time.

Beijing has been a key ally of Maduro and his predecessor late President Hugo Chavez and is currently buying more than 90% of Venezuela’s total oil exports. Chinese state oil giant CNPC was among the largest investors in Venezuela’s oil sector before U.S. energy sanctions were first imposed on Venezuela in 2019. China was also a big lender to Venezuela.

Early last year, CCRC began negotiating its participation in the two oilfields – Lago Cinco and Lagunillas Lago – and signed in May 2024 a 20-year production sharing contract with Venezuela, said the executive, speaking on condition of anonymity due to the sensitivity of the subject.

The contract model, introduced by the Venezuelan government in 2020 under the Anti-Blockade Law to cope with U.S. sanctions, allows investors to act as operators in return for an agreed share of production. PDVSA and Venezuela’s oil ministry did not respond to requests for comment. The oilfields in Venezuela’s second largest oil producing region, Lake Maracaibo, are part of a group of blocks PDVSA has been seeking partners for in recent years. Most of the intended partners are little known companies with no track record on oil production, according to a PDVSA document.

With no previous oil drilling experience, CCRC has since last September sent in around 60 Chinese staff skilled in oilfield development and a Chinese drill rig, aiming to quickly reopen about 100 wells and recover crude output, said the executive.

Production at the two fields, largely mothballed in recent years due to lack of investment and technical expertise, is now running at 12,000 bpd, said the executive.

CCRC aims to develop a total of 500 wells and raise output to up to 60,000 bpd by the end of 2026, he said, adding that it’s a mix of light and heavy oil, with light crude to be delivered to PDVSA and heavier crude destined for China.

“Because of the U.S. sanctions on Venezuela’s oil sector, no big name companies would dare operate there, handing opportunities to small companies like Concord,” the executive said.

State oil company PDVSA, which controls joint ventures and contracts, has stabilized oil output at around 1 million bpd, in part because of U.S. licenses that allow a limited number of foreign partners to operate there and export oil.

Since the U.S. imposed energy sanctions on Venezuela in 2019, most Chinese state oil firms have stopped lifting oil. Chinese independent refiners, however, continue to buy the oil via traders.