MONTREAL, April 24, 2024 (BSS/AFP) - Canada-based LNG Energy Group announced on Wednesday it had signed an agreement with Venezuela's state-owned PDVSA Petroleo, though the renewal of US oil sanctions could potentially pose problems.

The company's statement said the deal to develop and produce oil and gas in Venezuela was closed on April 17 and involves two onshore areas with a current output of 3,000 barrels per day.

Under the agreement, LNG "will have a contractual entitlement to between 50-56% of the hydrocarbons production," the statement said.

However, the deal was finalized under an exemption to US sanctions that is set to expire in the coming weeks.

LNG said it will "assess in the coming days the applicability" of the sanctions and "determine the most appropriate course of action."

"The company intends to operate in full compliance with the applicable sanctions regimes," it added.

The United States announced its decision to reimpose sanctions on Venezuela last week, citing repression by President Nicolas Maduro's government of opponents ahead of July elections.

Oil companies have been given until May 31 to comply with the sanctions.

Experts say the sanctions regime may still allow companies wishing to work with Venezuela to request special permits, such as those granted to US oil giant Chevron.

Venezuela has the largest proven oil reserves in the world, but production has plummeted after years of mismanagement and crushing sanctions.