Chevron announced it has agreed with Venezuela to update the terms governing its joint ventures in the country and will invest in excess of $7 billion over the coming five years. The company said the investment is aimed at driving production toward about 600,000 barrels per day.
According to Chevron, the revised agreements enhance fiscal, commercial and legal provisions for its Venezuelan operations and add further acreage in the Orinoco Belt. The company characterized the expansion as the culmination of several months of negotiations that were handled separately from a recent Washington announcement regarding a deal intended to take majority control of roughly 65 billion barrels of Venezuela's oil reserves.
The move takes place in the context of broader U.S. policy activity on Venezuela. Following the U.S. capture and removal of Venezuelan President Nicolas Maduro from office in January, U.S. President Donald Trump has promoted a $100 billion reconstruction plan for Venezuela's energy sector and has encouraged U.S. oil companies to invest in the country.
Citing its long operational history in Venezuela, Chevron noted that its activities in the country have continued uninterrupted for at least 100 years. By contrast, other major U.S. oil producers have not returned to the country; ExxonMobil and ConocoPhillips remain on the sidelines. The two companies exited Venezuela in 2007 after their assets were nationalized under the previous government of President Hugo Chavez.
Chevron said the planned investment will support production increases across its three Venezuelan joint ventures. The company reported these ventures have already raised output by 15% so far this year. Chevron also indicated that total costs associated with the operations are expected to stay under $20 per barrel.
Context and company position
The agreements combine revised commercial arrangements and additional acreage in the Orinoco Belt with a capital commitment that the company expects will facilitate notable output growth. Chevron framed the package as an outcome of direct negotiations with Venezuelan authorities conducted over several months.
Operational outlook
Chevron's stated production aim of about 600,000 bpd and the reported 15% year-to-date increase at its three joint ventures underline the company's operational focus in Venezuela. The company also emphasized a cost structure it expects to keep below $20 per barrel.