Chevron will invest more than $7 billion in Venezuela over the next five years after being assigned two additional oilfields in the Orinoco Belt. The plan aims to more than double the company's production in the country to 600,000 barrels a day, extending the only U.S. oil major's presence there as Washington pushes to increase Venezuelan oil output through private investment.
Chevron adds acreage in the Orinoco Belt
Chevron announced Wednesday it will invest more than $7 billion in Venezuela over the next five years, after being assigned two additional oilfields in the Orinoco Belt, the region that holds most of the country's extra-heavy crude reserves. The company plans to raise its production in Venezuela to 600,000 barrels a day, up from about 280,000 barrels a day currently.
The company is the only U.S. oil major active in Venezuela, operating through joint ventures with state-owned PDVSA. CEO Mike Wirth said the new terms mean "we are strengthening a portfolio that we believe can deliver attractive low-cost oil growth". Separately, Chevron's existing ventures have grown production 15% this year, according to the company.
Washington's expanding role in Venezuelan oil
The announcement follows the Trump administration's push to increase crude oil production in Venezuela through private investment, after years of disrepair in the country's oil infrastructure under its socialist government. President Trump said Friday that the U.S. secured majority control over 65 billion barrels of Venezuela's crude reserves, about 20% of the 303 billion barrels the country is thought to hold. U.S. Energy Secretary Chris Wright is visiting Venezuela Wednesday.
Washington has partnered with private firm North American Blue Energy Partners, which has been granted concessions to 17 oilfields for 100 years by Venezuela's interim government. NABEP, in turn, has given the U.S. Defense Department a 35% equity stake. However, the Trump administration's separate attempt to take a majority stake in a Venezuelan venture and refill the U.S. Strategic Petroleum Reserve with its output has been greeted skeptically by analysts, who question its legality and which American companies will take part.
Markets react to the expansion
The U.S. captured former President Nicolás Maduro in a military raid in January and seized control of the country's oil exports. Washington has since partnered with interim President Delcy Rodríguez, who served as vice president under Maduro. Total Venezuelan output reached 1.12 million barrels a day in July, according to the International Energy Agency, up from just under 1 million barrels a day at the start of the year.
Chevron shares rose 1% in premarket trade after the announcement, extending a gain that has taken the stock up 38% this year. Crude-oil prices surpassed $90 per barrel the same day.
Sources: CNBC, MarketWatch
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