Chevron Ramps Up Venezuela Operations With $7 Billion Investment

Chevron announced on Sept. 2 that its Venezuelan joint ventures plan to invest more than $7 billion over the next five years, part of an expansion expected to more than double the company’s production in the country.

Under new agreements with Venezuela, Chevron will receive improved investment terms and access to additional oil fields in the Orinoco Belt, a vast region of central Venezuela containing some of the world’s largest deposits of extra-heavy crude oil.

The U.S. oil giant said the agreements would allow it to develop the projects at a cost of less than $20 per barrel.

“Chevron’s history in Venezuela spans more than a century, and our expanded position reflects our confidence in the country’s deep resource potential,” Chevron Chairman and CEO Mike Wirth said in a statement.

New Oil Fields

Chevron operates in Venezuela through three partnerships with affiliates of the state-owned oil company Petróleos de Venezuela, commonly known as PDVSA.

One of those partnerships, Petroindependencia, has received the right to develop three additional areas in the Orinoco Belt. Chevron owns 49 percent of the venture, with the Venezuelan state retaining majority control.

The new fields are close to Chevron’s existing operations, making it easier to expand production using nearby facilities and infrastructure.

“The greenfield sites expand the joint venture’s existing operational footprint where it is increasing extra-heavy oil production,” Chevron said in a statement.

The company also operates through the Petropiar partnership in the Orinoco Belt and Petroboscan in western Venezuela. Production from the three ventures has increased by 15 percent so far this year, according to Chevron.

“We appreciate the leadership of the Administration, particularly the U.S. Department of Energy, and Secretary [Chris] Wright’s partnership in helping facilitate the conditions for further investment and growth,” said Wirth, adding that the new projects would bolster America’s energy security.

Push to Lower Oil Prices

Chevron’s announcement came one day after Wright said during a visit to Caracas that several agreements with foreign oil companies would more than double Venezuela’s total production over the next several years.

“The investment in these deals will massively grow oil production, which will give downward pressure on oil prices,” Wright told reporters.

Wright said the Trump administration is also working to increase refining capacity, which he identified as a major factor keeping U.S. gasoline and diesel prices elevated during the conflict with Iran.

President Donald Trump said on Sept. 1 that Chevron, Exxon Mobil, and other major oil companies were preparing to invest in Venezuela.

“We have Exxon going in, we have Chevron going in, we have our big oil companies going in, and everybody’s bidding,” Trump told reporters in the Oval Office.

The White House on Aug. 31 also announced a broader agreement that it said would give the United States access to roughly 65 billion barrels of Venezuelan oil.

Under that deal, Venezuela’s interim authorities granted North American Blue Energy Partners 100-year rights to operate 17 oil fields. The U.S. government received a stake in the company’s parent and the right to buy some of the oil at production cost.

Venezuela has an estimated 303 billion barrels of proven oil reserves, more than any other country. Despite that enormous resource base, its output declined for years because of underinvestment, deteriorating infrastructure, and mismanagement under the regime of former Venezuelan leader Nicolás Maduro.

Earlier this year, the Trump administration issued a general license allowing specified oil and gas transactions with Venezuela after Maduro was captured in a Jan. 3 U.S. military raid and brought to the United States to face criminal charges.