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As Chevron scrambles to recoup some $3 billion in losses over its Venezuela oil projects, the U.S. oil giant is now gearing up to launch a new drilling campaign that could add 65,000 barrels per day within a year, Reuters reports, citing unnamed sources.
Chevron has joint ventures with Venezuela’s state-owned PDVSA, but further drilling operations have been on hold since sanctions were expanded in 2019 following questions about the legitimacy of 2018 elections in which Nicolas Maduro assumed the presidency.
The Chevron-PDVSA joint venture now produces around 135,000 bpd, according to Reuters, representing a 70% increase over last year’s output. Last November, Washington authorized Chevron to expand its operations in Venezuela and export oil to the U.S.
In August, data showed Venezuela’s oil exports plunging by 38% compared to the previous month, when they had reached a three-year high. At issue is Venezuela’s inability to maintain production at upgraders responsible for converting extra heavy oil into suitable shipping grades.
The previous month, Venezuela’s oil exports had reportedly surged partly due to an increase in Chevron shipments.
While Chevron is the only Western supermajor with special authorization to operate oil fields and export from Venezuela, Washington has indicated that more authorizations could be in the future amid tight global supply.
U.S. national security advisor Jake Sullivan said last week that Washington is “prepared to engage in discussions [...] in return for concrete steps” towards a free and fair election in Venezuela.
Despite sanctions, Maduro has solidified his power to a significant extent, and the end result has been to push the country towards China, Russia and Iran.
With crude oil now soaring over $90 per barrel amid fears of a global tightness in supply, more Venezuelan oil for the market could help stave off a repeat of last year’s energy crisis and push down inflation.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com