Venezuela is looking to revive an offshore natural gas field close to the maritime border with Guyana amid an escalating territorial dispute after Venezuelan President Nicolas Maduro held a referendum to claim two-thirds of Guyana's territory.
Venezuela has initiated contact with international oil and gas supermajors – including Chevron, BP, and Shell – to urge them to explore and develop the Plataforma Deltana natural gas discoveries, which have been idle for over decade, Reuters reported last week, citing sources close to the negotiations.
Discoveries of natural gas have been made in the so-called Plataforma Deltana, but they have never been developed. The discoveries are also the energy project in Venezuela which is closest to Guyana's territorial waters.
U.S. supermajor Chevron has much at stake in Venezuela's oil and gas industry and in the escalating dispute between Venezuela and Guyana over the Essequibo region, which Maduro says he wants to annex.
Essequibo used to be part of Venezuela during its colonial period, but at the end of the 19th century, an international arbitration gave the land to Guyana, then a British colony. Venezuela has never accepted the arbitration decision, but for most of the time since it was made, it has not acted on its grievance. Related: U.S. Gasoline Prices Continue Falling as Futures Hit Two-Year Low
In Venezuela, before the U.S. eased the sanctions in October, Chevron was the only Western major with a special exemption from late 2022 to operate in Venezuela and export crude from the country holding the world's largest crude oil reserves.
Most of Venezuela's near-term growth in oil production is expected to come from Chevron's joint ventures, the U.S. Energy Information Administration (EIA) said after most of the sanctions were lifted.
The earlier exemption for Chevron led its share of production to increase to 135,000 barrels per day (bpd) in 2023, the EIA notes, expecting Chevron's crude oil output in Venezuela to rise to 200,000 bpd by the end of 2024.
Chevron is also the only company that has completed exploration in the offshore gas field Plataforma Deltana near the Guyana and Trinidad and Tobago maritime borders. Chevron certified 7.3 trillion cubic feet (TCF) of recoverable gas in 2010 and said two of Venezuela's five blocks there would be commercially viable. But Chevron never moved to a production stage.
Chevron has recently been in talks with Venezuela about the license for the blocks in Plataforma Deltana, according to two of Reuters' sources.
Venezuela's push to have oil majors sign up to develop more offshore resources comes as Maduro claims the rights to Essequibo, which is essentially two-thirds of Guyana's territory and which contains the waters of many of Guyana's huge oil discoveries made in recent years by a consortium of ExxonMobil and Hess Corporation.
The two U.S. supermajors are betting big on Guyana—Exxon has stated for years that Guyana is a top priority alongside the Permian shale play at home. Chevron, for its part, bet on Guyana earlier this year by announcing an all-stock transaction to buy Hess in a deal valued at $53 billion that will give the U.S. supermajor exposure to Guyana's large offshore oil reserves.
Analysts see meager chances that the Venezuela-Guyana dispute would escalate further and see Maduro's referendum and threats to annex a large part of Guyana's territory as a move to rally a nationalist vote amid waning popularity ahead of the presidential election.
Maduro's saber-rattling has led to an emergency meeting of the United Nations Security Council.
The U.S. National Security Council Coordinator for Strategic Communications, John Kirby, told a press briefing last week "we absolutely stand by our unwavering support for Guyana's sovereignty."
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Despite what experts see as low chances of a true conflict between Venezuela and Guyana, the oil industry and Wall Street watch closely the developments.
More investors in the options market appear to be positioning to protect themselves from slides in Hess shares as they are re-pricing the risks of the Chevron-Hess deal, according to data compiled by Bloomberg. As the Venezuela-Guyana dispute escalated, shares in Hess fell by 5% last week and traded on Thursday almost $14 lower than the value in Chevron's bid—the widest gap since the deal was announced.
By Tsvetana Paraskova for Oilprice.com
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