American oil giant Chevron will invest more than $7 billion through its joint ventures in Venezuela to double oil production to approximately 600,000 barrels per day over the next five years, the company said.
Chevron, the only U.S. oil company with a significant presence in Venezuela, said on Wednesday it had secured additional plots in the Orinoco Belt, where the company already holds substantial assets. Its joint venture Petroindependencia will expand to include two adjacent plots in the Carabobo region.
«Chevron’s history in Venezuela spans more than a century, and our expansion reflects our confidence in the country’s significant resource potential and its ability to compete for investment in our portfolio for decades to come», said Chevron CEO Mike Wirth.
This announcement comes just days after U.S. President Donald Trump unveiled an unprecedented deal involving a fifth of Venezuela’s oil reserves, under which the U.S. government would gain an ownership stake in a private oil company operating in the country. Chevron’s expansion is separate from this initiative but further bolsters Donald Trump’s efforts to boost production in Venezuela.
Production growth and new terms
Venezuela holds the world’s largest oil reserves, but its current production stands at only about 1.25 million barrels per day—far below the more than 3 million barrels per day the country pumped two decades ago. This decline followed years of mismanagement and underinvestment by state oil company PDVSA, as well as U.S. sanctions.
Venezuela’s total oil production is expected to reach 2 million barrels per day by the end of this decade, U.S. Energy Secretary Chris Wright said on Wednesday.
Chevron said its new agreements also include improved fiscal, commercial, and legal terms to protect long-term investments. Total production costs are expected to be less than $20 per barrel.
The joint venture’s infrastructure is in good condition, and the development of new plots will leverage existing facilities and pipeline infrastructure, Wirth said in an interview with CNBC. «Our ability to grow production at low cost is materially different from the situation if we were entering a new area where there were no roads, water, or power», he said.
Other energy deals in Venezuela
In addition to Chevron, oil company ENI, investor KEO Capital, and energy firm Primavera—co-founded by billionaire Fred Ersam—are also expected to sign energy deals in Venezuela as early as Wednesday, two sources close to the preparations told Reuters.
Most of the deals involve expanding projects that had been under negotiation as part of the transition of dozens of energy contracts to new terms under a sweeping oil reform approved in January. Wright, who arrived in Caracas late Tuesday, and Venezuelan Oil Minister Paula Enao are expected to oversee the signing of the contracts, officials said.
After the U.S. removed former Venezuelan President Nicolás Maduro from power in January, Donald Trump has pushed a $100 billion plan to rebuild Venezuela’s energy sector, urging U.S. oil companies to invest in the country. While Chevron has operated in Venezuela continuously for at least 100 years, other oil companies such as ExxonMobil and ConocoPhillips exited the country in 2007 after their assets were nationalized under the previous government of President Hugo Chávez and have stayed away since.
Chevron has operated in Venezuela since 1923 and has three joint ventures in the country. Petroindependencia and Petropiar operate in the Orinoco Belt, while Petroboscan operates in the western state of Zulia. The additional plots in Carabobo expand existing operations where the joint ventures are increasing production of extra-heavy oil, Chevron said.
Source: Al Jazeera
