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The U.S. government granted Chevron another three-month extension to a sanction waiver that allowed the supermajor to continue doing business in Venezuela, quenching concerns it would have to up and leave to avoid penalties.
Reuters reports the new waiver will expire on January 22, adding it was a topic of heated discussions in the Trump administration. Among the most notable proponents of the extension is Secretary of State Mike Pompeo, who has argued that a U.S. company in Venezuela would ensure a quicker recovery of its oil industry after—and if—the Maduro government falls from power. Former National Security Advisor John Bolton was on the opposite side.
Chevron, together with Venezuela’s PDVSA, operates the Petroboscan joint venture, in which it holds a 39-percent stake. Like PDVSA’s other JVs, Petroboscan suffered production outages earlier this year after a series of blackouts hit Venezuela. To date, the company produces around 200,000 bpd, with Chevron’s share of that at 34,000 bpd.
The company asked the Department of the Treasury for an extension of the waiver earlier this year with the department not giving any positive signs about its pending decision at all until the news broke about the extension.
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The waiver extension is good news for PDVSA, too. If Chevron had left Venezuela, this would have had a severe impact on overall oil production. It would, however, likely resulted in Venezuela confiscating any “abandoned” oil assets.
“Almost half the rigs are being run by the Yanks, and if the window shuts down on this in two months, then that’s really going to hurt Venezuela unless the Russians and the Chinese come in,” an analyst from Caracas Capital Markets told Bloomberg in August when worry about the extension of the waiver first surfaced.
Currently, Venezuela produces about 600,000 bpd of crude oil, according to Reuters, so Chevron’s share in the total amounts to one-third.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.