By Francesca Landini
MILAN, Sept 4 (Reuters) - Italian oil company Eni has improved its chances of recovering more than $2.3 billion owed by Venezuela with the signing this week of a new oil project deal in the country, analysts said on Friday.
After nearly three decades in Venezuela, Eni has accumulated those receivables from state-owned oil group PDVSA.
As Washington and Caracas moved this year to reopen Venezuela's oil sector to international investment, Eni faced a stark choice: deepen its commitment
to the country or risk worsening its chances of recovering its claims as the United States pushes to restructure old debt.
The Italian group's decision to remain in the country despite political upheaval, economic collapse and U.S. sanctions is beginning to yield results.
Eni on Wednesday signed an agreement with PDVSA to develop the giant Junin 5 heavy oil project in the country's Orinoco Belt, securing a key role in U.S.-backed efforts to revive the country's oil industry.
"The deal will provide further opportunities for value creation for the country and for the gradual recovery of outstanding receivables," an Eni spokeswoman said.
Eni and PDVSA plan to invest about $1.5 billion a year in the project, which currently produces about 12,000 barrels per day (bpd). Output is expected to reach 400,000 bpd by 2030.
The project converts Eni's existing stake in Junin 5 to a 25-year production-sharing agreement with Eni acting as the field operator.
"We see the deal as an opportunity to unlock future production and recover existing receivables," an analysis by Barclays said.
After a Caracas signing ceremony for oil deals between a handful of international companies and Venezuela attended by President Delcy Rodriguez and U.S. Energy Secretary Chris Wright, Eni Chief Executive Claudio Descalzi said on Wednesday that work would start immediately at Junin 5.
"We will begin drilling the first well tomorrow," he said.
STAYING THE COURSE
On top of Venezuela's direct debt to Eni of $2.3 billion, the country owes $400 million to a 20-year-old natural gas joint venture at the Perla field that is equally owned by Eni and Spain's Repsol.
Eni continued operating the offshore Perla gas project even after U.S. sanctions halted Venezuela's payments and contributed to PDVSA's rising debts. The output has gone almost exclusively for domestic use.
But in March, a new pact opened the possibility of future Venezuelan gas exports there, enhancing Eni's prospects.
"Projects that risked becoming stranded assets can now make a contribution to the group and help support its production growth," said Davide Tabarelli, head of energy consultancy Nomisma Energia.
Eni also owns a stake in the Corocoro offshore oil field where production was halted in 2019 due to U.S. sanctions on PDVSA. There has been no news yet on changes to that project.
Eni produces about 64,000 boepd in Venezuela and could raise that eventually to 1 million boepd, industry sources said.
Washington now wants to address Caracas' large debt burden. Wright recently said that China would have no claim on revenue from Venezuela's fields that would be partially controlled by Washington, potentially cutting off a key mechanism Caracas has used to repay Chinese loans.
(Reporting by Francesca Landini; additional reporting by Caracas Newsroom; Editing by Cynthia Osterman)
