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Hope for crisis-stricken Venezuela may be dwindling, but Chevron—who has been steadfastly operating in the country for almost 100 years despite the unattractive business environment—can rest a bit easier today as Western-recognized Venezuelan President Juan Guaido has vowed to protect Chevron’s Venezuela assets in the event that the United States declines to extend Chevron’s license that allows it to operate in a sanctioned country, according to Reuters.
Chevron’s license to work in Venezuela expires on July 27, and if not renewed, Chevron would no longer be able to lawfully operate in the Latin American country. Most other foreign oil companies have already been pushed out of Venezuela by Maduro’s predecessor, former President Hugo Chavez. Chevron decided to stick it out, tempted by the vast oil riches of the Orinoco Belt.
For this privilege, Chevron had to suck up some rather unfavorable terms which Chavez demanded, not to mention its likely tiresome exposure to corruption in the country such as overbilling by contractors, which probably was a distant second to mustering up a business face when dealing with the likes of an unstable Chavez.
Under normal circumstances, if Chevron were to stop operating in Venezuela, its assets would be considered forfeit and swallowed up by the Maduro regime.
“Companies that leave the [Orinoco] oil belt will be substituted by companies of equal quality from Venezuela’s allies,” Venezuela’s Foreign Minister Jorge Arreaza said in April, Reuters reported—its allies meaning Russia and China.
But today’s backing by the leader of Maduro’s opposition should give Chevron hope that if it indeed does have to leave Venezuela until a time when sanctions are lifted, its assets will be protected and returned to Chevron when it is ready to restart production.
The United States is currently discussing the license renewal request.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.
Chevron’s license to work in Venezuela expires on July 27, and if not renewed, Chevron would no longer be able to lawfully operate in the Latin American country. Only President Maduro’s government has the authority to renew Chevron’s licence or let it lapse.
The Maduro government may decide instead to replace Chevron with companies from its allies China and Russia which are keeping Venezuela’s economy afloat.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London