US oil giant Chevron has announced plans to invest more than $7 billion through its Venezuela joint ventures to double oil production to approximately 600,000 barrels per day over the next five years in the South American country. The company made the announcement on Wednesday.
Chevron is the only major US oil company with a significant presence in Venezuela. The company said it has been assigned additional acreage in the Orinoco Belt, where it already has an established position, and its Petroindependencia joint venture will expand to include two adjacent areas in the Carabobo region.
Chevron CEO Mike Wirth stated: "Chevron's history in Venezuela spans more than a century, and our expanded position reflects our confidence in the country's deep resource potential and its ability to compete for investment within our portfolio for decades."
The announcement comes just days after US President Donald Trump unveiled an unprecedented deal involving a fifth of Venezuela's oil reserves, with the US government taking an equity stake in a private oil firm operating there. Chevron's expansion is separate from that endeavor, but it further cements Trump's efforts to boost output in Venezuela.
Venezuela holds the world's largest oil reserves, but current production is only about 1.25 million bpd, down from over 3 million bpd two decades ago, following years of mismanagement and underinvestment by state-run oil firm PDVSA and US sanctions.
Venezuela's total oil output is expected to reach 2 million bpd by the end of this decade, US Energy Secretary Chris Wright said on Wednesday. Chevron also said its new agreements provide enhanced fiscal, commercial, and legal terms to protect long-term investments, with total production costs expected to be less than $20 per barrel.
Wirth told CNBC that the joint venture's infrastructure is in good shape, and development in the new areas will build on existing facilities and pipeline infrastructure. "Our ability to grow at low cost is quite different than if we were going into a greenfield area that didn't have roads, water, or power," he said.
Besides Chevron, oil producer ENI, investor KEO Capital, and energy firm Primavera, co-founded by billionaire Fred Ehrsam to invest in Venezuela, are among companies set to sign energy agreements in Venezuela as soon as Wednesday, according to two sources close to the preparations who spoke to Reuters.
Most pacts imply project expansions that have been in negotiation as part of the migration of dozens of energy contracts to new terms under a sweeping oil reform approved in January. Wright, who arrived in Caracas late Tuesday, and Venezuela's oil minister, Paula Henao, are expected to oversee the signing of the contracts.
Following the US abduction of former Venezuelan President Nicolas Maduro from office in January, Trump pushed a $100 billion reconstruction plan for Venezuela's energy sector, urging US oil companies to invest in the country. While Chevron's Venezuela operations have continued uninterrupted for at least 100 years, fellow oil producers ExxonMobil and ConocoPhillips exited in 2007 when their assets were nationalized under former President Hugo Chavez and have remained on the sidelines.
Chevron has operated in Venezuela since 1923 and has three joint ventures: Petroindependencia and Petropiar in the Orinoco Belt, and Petroboscan in western Zulia state. The additional Carabobo sites expand existing operations where joint ventures are increasing extra-heavy oil production.
Source: www.aljazeera.com