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The U.S. could be viewing the situation in Venezuela as close to being resolved, as suggested by the extension of the U.S. sanctions waiver for Chevron to continue operating legally in Venezuela for three more months, according to Carlos Vecchio, the ambassador to the U.S. of Venezuela’s opposition leader Juan Guaidó.
“The oil sector is very complicated, three months isn't anything. So it tells you, in our view, that we can build a solution in a short period of time,” S&P Global Platts quoted Vecchio as saying in a speech at the National Press Club in Washington, D.C.
Chevron has been lobbying with the U.S. Administration to receive an extension to its sanctions waiver after its expiration date of July 27.
The U.S. Department of the Treasury did extend on Friday the sanction waivers to Chevron and four oilfield services companies—Halliburton, Schlumberger, Baker Hughes, and Weatherford International—to continue to deal until October 25 with Venezuela’s state oil firm PDVSA, which is otherwise subject to strict U.S. sanctions.
The U.S. oil giant Chevron is participating in four oil-producing projects with PDVSA with minority interests, and its net daily production averaged 42,000 bpd of crude oil and 9 million cubic feet of natural gas in 2018.
Before the waiver extension, Russ Dallen, managing partner at brokerage Caracas Capital Markets, told Bloomberg earlier in July that the ideal outcome for Chevron would be to still have the assets in Venezuela when Nicolas Maduro’s regime ends.
“I think their goal is to outlast Maduro,” said Dallen.
“We are not getting out of Venezuela. We’ve been in Venezuela for nearly a hundred years. It’s a difficult place to work today,” Chevron’s chairman and chief executive officer Mike Wirth told Bloomberg in April.
According to Guaidó’s envoy Vecchio, Venezuela can’t recover its plunging oil production with state investments and will need private participation to start boosting oil output once Maduro is removed.
Earlier this month, IHS Markit warned that Venezuela could be pumping as little as below 500,000 bpd of crude oil next year amid the economic and political crisis. According to OPEC’s secondary sources—the ones the cartel considers the official production figures—Venezuela’s crude oil production in June dropped by 16,000 bpd from May to stand at 734,000 bpd. To compare, Venezuela’s crude oil production in 2017 averaged 1.911 million bpd.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.