Chevron has boosted oil production at its joint venture with Venezuela's PDVSA to the highest in almost a year, Bloomberg reports, adding that the Maduro government is considering giving foreign oil field operators more control over their joint business with PDVSA as a way of advertising Venezuela's oil industry and increasing revenues.
"The likely goal is to make it so attractive, companies start to lobby harder in the U.S.," Bloomberg quoted an analyst from a Colombia-based consultancy as saying.
At the moment, Chevron is the only U.S. company still doing oil business in Venezuela. The supermajor was granted a sanction exemption waiver by Washington and the waiver was last month extended until April.
Petroboscan, the joint venture Chevron operates together with PDVSA, produced around 200,000 bpd as of October 2019, with Chevron's share of this at 34,000 bpd. The U.S. supermajor holds a 30-percent stake in the venture.
Chevron reported losses of $104 million related to its business in Venezuela for the first nine months of last year. Yet if the Treasury Department stops granting it sanction waivers, Chevron would have to leave the country, which would cost it $2.7 billion in assets.
Washington would not want this to happen, according to analysts. If Chevron leaves, Chinese companies and Rosneft will fill the gap, expanding their already significant influence in the country with the world's largest oil reserves at the expense of U.S. influence.
Besides the Petroboscan venture, Chevron also operates the Petropiar heavy crude upgrader with PDVSA, along with two other projects. Operations at Petropiar were suspended for a time, but now production is back on track with the daily average at 130,000 bpd, Bloomberg cited unnamed sources as saying.
This higher production contributed to Venezuela's 100,000-bpd increase in overall production in January, according to the S&P Global Platts monthly survey of OPEC production. The struggling country's daily average reached the highest in a year last month, at 820,000 bpd.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
It has also been an honest partner of Venezuela’s PDVSA partnering it in four joint oil projects. It recently helped raise Venezuela’s oil production prompting the government of Venezuela to consider granting it more control over its joint business with PDVSA.
Still with US sanctions against Venezuela, Chevron finds itself between a rock and a hard place. If it is declined a sanction exemption waiver by the US government to continue operating in Venezuela, it could cost it $2.7 billion in assets. However, there is little likelihood of this happening because the alternative is that Chinese oil companies and Russia’s giant oil Rosneft will immediately fill the gap expanding their already significant influence in the country with the world’s largest oil reserves at the expense of U.S. influence.
Another reason why Chevron will most probably continue to receive a US sanction waiver is to keep Venezuela’s oil industry functioning until installing the US puppet Juan Guaido as president of Venezuela.
However, there will be no regime change in Venezuela because the people of Venezuela will neither accept a puppet imposed on them nor US interference in their affairs.
China and Russia are determined to keep Venezuela’s economy afloat with China helping raise Venezuela’s production of crude and products while Rosneft helping sell Venezuelan crude around the world and get paid for it and also as a repayment for the loans it has extended in the past to the government of Venezuela.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London