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Chevron will officially assume control of an oil project in Venezuela this week, Bloomberg has reported, citing unnamed sources.
The supermajor will process heavy crude at the Petropiar facility, called an upgrader, and then export it to refiners on the U.S. Gulf Coast after the Treasury Department granted Chevron an exemption from Washington’s sanctions on Caracas.
Sanctions against Venezuela were introduced in 2019 by the Trump administration, and the decision of his successors to ease some of these came after the resumption of talks last month between the government of Nicolas Maduro and the Venezuelan opposition. Those talks resulted in the signing of a U.S.-brokered accord between the government and the opposition in order to resolve the country’s political turmoil.
Shortly after the accord was signed, the Treasury granted Chevron a license to operate in Venezuela but banned PDVSA, Venezuela’s state-owned oil company, from receiving any profits from the joint operations. Instead, the money due PDVSA will be used to pay down its debt to the U.S. supermajor. The license is valid for six months.
According to the Bloomberg report, Chevron could increase the production of oil from the Petropiar project and other joint ventures it has with PDVSA from 50,000 bpd to 200,000 bpd within a year. The first shipment is expected to load later this month.
Chevron’s CEO Mike Wirth, however, has sounded a note of caution with regard to the recovery of Venezuela’s oil output. In October, he told Bloomberg that it could be “months and years in order to begin to maintain and refurbish fields and equipment and change any investment activity.”
Meanwhile, in the U.S., the chief executive of Continental Resources, shale pioneer Harold Hamm, slammed Washington for its deal with Venezuela, accusing the Biden administration of killing the U.S. oil industry. He also said that Venezuelan crude cannot replace domestic oil from the shale patch.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com