MediumI Geo-Economics & Chokepoints16 September 2026, Wednesday
Continental Resources signs memorandum with PDVSA for the 30 billion barrel Ayacucho 2 block in the Orinoco Belt
US-based Continental Resources signed a memorandum of understanding with PDVSA on 16 September to operate the roughly 126,000-acre Ayacucho 2 block in Anzoátegui state with a 100% interest.
Continental Resources signed a memorandum of understanding with Venezuela's state oil company PDVSA on 16 September 2026. The memorandum covers the operation and development of the Ayacucho 2 block in Anzoátegui state, in the northern Orinoco Belt. The block covers approximately 126,000 acres and holds an estimated 30 billion barrels of oil in place. The parties plan to sign a long-term Production Participation Contract (CPP) in the coming weeks. Once the contract is signed, Continental will operate the block with a 100% working interest. The company's CEO Doug Lawler and founder Harold Hamm said the deal takes the company to a new scale. Abroad, the company already operates in Argentina's Vaca Muerta and in Türkiye.
The memorandum shows that, following the NABEP, Chevron and Eni agreements of 2 September, US independent producers are also beginning to enter Venezuela. Continental said it had assessed the country on its own after the Trump administration called on US energy companies to rebuild Venezuela's oil sector. According to US Energy Information Administration (EIA) data cited by Fox Business, Venezuela's proven reserves stand at 303 billion barrels. Yet the country produced only 742,000 barrels a day in 2023, a 70% decline compared with 2013. Processing the heavy crude of the Orinoco requires substantial capital and technology, so the impact on production will only be seen over years.
Talay assessment
Bottom line
The Continental–PDVSA memorandum is an important signal that, after the NABEP, Chevron and Eni deals of 2 September, US independent producers are also turning to Venezuela; but what is binding is the Production Sharing Contract planned for the coming weeks. As Orinoco heavy crude requires significant capital and technology, the impact on output will only be seen over years. The most likely path is for the contract to be signed and investment to start gradually because of political risk.
Likely effects
- Venezuelan oil sectorPositive6 months+
A US company operating a block with a 100% working interest could accelerate the capital and technology inflows needed to revive output, which has fallen 70% since 2013.
- Global oil supplyUncertain6 months+
Output growth in a country with proven reserves of 303 billion barrels could ease the supply side over time; however, its effect on the near-term oil balance is negligible.
- Investment and political riskNegative1–6 months
The scale of investment depends on the stability of US–Venezuela relations; any change in policy or the sanctions framework could directly affect contract terms and the capital timetable.
Possibilities, ranked
- 1Contract signed, gradual investment50%
The Production Sharing Contract is signed; Continental begins appraisal and initial development work, with major capital spending phased in.
Watch: Announcement by Continental and PDVSA of the signing of the Production Sharing Contract
- 2Delay and renegotiation40%
Negotiations over contract terms, the tax regime or political guarantees drag on; signing takes months rather than weeks.
Watch: Slippage of the planned signing timetable and new statements on terms
- 3Memorandum shelved10%
A deterioration in US–Venezuela relations or a change in the sanctions framework suspends the project.
Watch: A change in US sanctions or licensing policy towards Venezuela
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.