Chevron to Up Investments, Oil Output in Venezuela After US Deal
Chevron said Wednesday it will invest more than $7 billion over the next five years and more than double its oil production to about 600,000 b/d through additional sites in the Orinoco Belt, which were granted to Chevron’s joint-venture operations as part of the recent U.S. deal to control Venezuela’s reserves.
Under the agreements, the Petroindependencia, S. A. joint venture, in which Chevron’s subsidiary holds a 49% interest, has been assigned the rights to develop the adjacent Carabobo-1 and Carabobo-2-South-A areas in Venezuela’s oil-rich Orinoco Belt, the U.S. oil major said.
Houston-based Chevron said those agreements set out provisions for the oil major’s joint-venture operations in Venezuela, including enhanced fiscal, commercial and legal terms intended to support “durable and competitive long-term investments.”
Chevron Chief Executive Mike Wirth said in a statement that the “improved terms” and additional acreage will help the major grow its oil production with low costs in the South American country. The company cited total costs of less than $20/bbl and a large resource base for its operations in Venezuela.
The greenfield sites would expand the joint venture’s existing operational footprint where it is increasing extra-heavy oil production, it said.
Greenfields are new, completely undeveloped projects that tend to yield the highest return potential, while brownfields refer to projects on land that has already been previously developed and is now idle or abandoned.
Chevron said the additional sites would further strengthen its growing portfolio in Venezuela following an agreement in April, in which the major increased its working interest in Petroindependencia to 49% and received the rights to develop the Ayacucho 8 area adjacent to the Petropiar, S.A. joint venture.
Collectively, Chevron said its three joint ventures have grown production by 15% in the year to date.
Chevron is one of the first and largest oil-and-gas companies operating in Venezuela, dating back to 1923. The oil major’s JVs Petroindependencia and Petropiar, S.A. operate extra-heavy oil projects in the Orinoco Belt, while Petroboscan, S.A. is located in western Venezuela’s Zulia State.
The U.S. said Monday that Venezuelan interim authorities have granted a little-known private company, North American Blue Energy Partners, 100-year concessions for 17 oil fields with more than 65 billion barrels of proven oil reserves — about one-fifth of the country’s total. Venezuela is estimated to have the world’s largest oil reserves.
Most analysts have said it is unlikely that Venezuelan oil production would increase significantly within a short period time, and companies must feel confident that their long-term investments are protected under a clear legal framework.
While Venezuela’s current oil production level of over 1 million b/d is the highest since 2019, it is well below a record of nearly 3 million b/d in the late 1990s; the decline has been driven by underinvestment and mismanagement of its oil-and-gas assets and energy infrastructure.
–Reporting by Frank Tang, ftang@opisnet.com; Editing by Dean Visser, dean.visser@dowjones.com
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