(written from a Production point of view)
According to the script of the Star Trek: The Next Generation fifth season episode "The Inner Light", the Parvenium Sector was the region of space in which the USS Enterprise-D conducted a magnetic wave survey shortly before finding the Kataan probe. The Star Trek Encyclopedia (4th ed., vol. 2, p. 127) described this sector as a region of Federation space.
In the episode, the line in which it was mentioned remained, but the reference was changed to the Parvenium system.