BP Secures Venezuela Offshore Gas License With ADNOC-Backed XRG

The recent agreement between British Petroleum (BP) and the Venezuelan government to advance offshore natural gas development has sparked a mix of excitement and skepticism within the energy community. On one hand, the deal represents a major coup for the UK-based oil giant, which is expanding its footprint in the region. On the other hand, it raises questions about the viability of Venezuela’s oil industry and the risks involved for BP.

The agreement grants BP an exploration and production license for Phase 2 of the Loran field, estimated to contain approximately 4 trillion cubic feet of recoverable gas resources. This development comes at a time when Venezuela’s energy sector is still reeling from years of underinvestment and mismanagement. The country’s oil output has been steadily declining since 2015, and its refining capacity is woefully inadequate to meet domestic demand.

BP’s decision to partner with XRG, the international investment arm of Abu Dhabi’s ADNOC, may seem like a strategic move to mitigate risk. However, it also raises questions about the motivations behind this partnership. The fact that BP will hold an equal working interest alongside XRG and UCC Oil and Gas Holding blurs the lines of responsibility.

The agreement marks a further step in BP’s expansion plans in Venezuela, following a memorandum of understanding signed with the government in April 2026. This framework for cooperation on exploration and potential development opportunities across the Plataforma Deltana region is seen as a key plank of BP’s strategy to tap into the country’s vast offshore gas reserves.

The Carúpano East Block agreement establishes a framework for evaluating exploration opportunities and discussing potential future development of the offshore acreage. This separate memorandum of understanding does not represent a development commitment but rather a tentative step into the unknown, highlighting the complexities involved in navigating Venezuela’s energy landscape.

BP’s involvement in Venezuela at this juncture raises questions about the company’s priorities. Is it seeking to capitalize on existing experience and infrastructure across the Caribbean and Latin America, or is there a more strategic imperative at play? The presence of BP Chief Executive Meg O’Neill and David Campbell, senior vice president for Latin America and the Caribbean, during the signing of the agreements suggests a high level of commitment from the top.

The stakes are high, not just for BP but also for Venezuela. If developed commercially, Loran’s resource base could establish a significant new source of offshore gas production in the region. However, it also underscores the risks involved in investing in a country with a history of economic mismanagement and a fragile energy sector.

BP’s Venezuelan foray is part of a broader trend of Western oil majors seeking to tap into emerging markets’ vast resources. This raises concerns about the impact of foreign investment on local economies and the environment, particularly as the world grapples with climate change and energy transition challenges.

The outcome of this gamble will depend on various factors, including the ability of the Venezuelan government to provide a stable business environment and BP’s willingness to adapt to changing circumstances. As the complex dance between energy majors and emerging markets continues to unfold, the world will be watching closely to see if BP’s decision pays off or becomes another casualty of Venezuela’s troubled energy landscape.