Chevron doubles production in five years with $7 billion investment plan.
Chevron plans to invest a total of more than $7 billion in order to double the crude oil production from Venezuela, to 600,000 barrels per day, over the next five-year period. This is part of an expansion plan with PDVSA, following a recent energy reform.
The U.S. Oil Major's expansion announced on Wednesday is the culmination after several months of negotiations conducted separately to Washington's announcement about an unprecedented deal that would take majority control over Venezuela's oil reserve of 65 billion barrels.
Venezuela is home to the largest oil reserves in the world, but mismanagement, corruption and underinvestment, as well as U.S. sanctions, have severely damaged its oil industry.
The production peaked in the late 90s at over 3 million barrels per day before falling sharply. It has fluctuated between 1.1 and 1.2 million barrels per day in recent months.
Chevron has a right to nearly half of this production under the expanded agreement. It has been producing around 290,000. bpd crude oil, which is all exported to the U.S.
Chevron said that the agreements include enhanced fiscal, legal and commercial terms, as well as additional land in Venezuela's Orinoco Belt.
US PUSHES INVESTMENT IN ENERGY
After the U.S. captured and removed Venezuelan President Nicolas Maduro in January, U.S. president Donald Trump pushed for a $100 billion plan to rebuild Venezuela's energy industry, encouraging U.S. companies to invest.
ExxonMobil, ConocoPhillips and other oil companies have not participated in Chevron's Venezuela operations for more than 100 years.
Both companies left the country when their assets became nationalized in 2007, under the former government of Hugo Chavez.
Chevron stated that the investment will support production growth in its three Venezuelan joint-ventures, which has increased output by 15 percent so far this calendar year. The company stated that total costs will remain below $20 per barrel.
Chevron’s Petroindependencia, a joint venture in which the company holds a 49 percent stake, has been granted rights to “develop” two new areas in Venezuela’s Orinoco Belt. This will allow it to expand its operations in this region.
Mike Wirth, CEO of Chevron, said: "Chevron has a long history in Venezuela. Our expanded position reflects confidence in Venezuela's deep resource potential and ability to compete with our portfolio over decades."
Chevron is a Venezuelan company that has been operating in Venezuela since 1923. It has three joint ventures there. Petroindependencia, Petropiar and Petroboscan operate in the Orinoco Belt while Petroboscan is located in western Zulia State.
Chevron's expanded acreage in Venezuela and better terms will allow it to take a bigger position as the U.S. major oil company seeks to boost production of Venezuela's extra-heavy crude.
This week, Eni from Italy, ONGC of India, GeoPark from Colombia, and GE Vernova, a U.S. company, are expected to sign contracts for energy projects with Venezuela.
(source: Reuters)
