Chevron gains more time in Venezuela
Chevron has won more time in Venezuela and is now waiting on Presidentelect Joe Biden to see if duking it out in theoil-rich country has been worthwhile.
The Treasury Department extended until June 3 its authorization for Chevron and oil-service providers Halliburton, Schlumberger, Baker Hughes and Weatherford International to carry out transactions in the country that are essential to preserve their assets, keep employees safe and pay contractors. The previous deadline was Dec. 1. Since April, they have been barred from drilling wells or selling, buying or transporting crude and oil products.
Venezuela, which holds the world’s largest crude reserves, has seen its once mighty oil industry crumble under Nicolas Maduro’s regime. The demise was accelerated by the unprecedented oil market crash triggered by the Covid-19 pandemic and sanctions imposed by U.S. President Donald Trump.
Maduro has expressed hope for improved U.S. relations after Biden won, but prospects for a quick thaw are dim because Biden will be taking over at a politically charged moment when Maduro is accused of a legislative power grab. Trump’s maximum pressure policy on Venezuela has bipartisan support in the U.S. and among Venezuela’s neighbors.
Biden influence
“Any sign of accommodation from the Biden administration could be interpreted in Venezuela as acceptance of the status quo, and could inadvertently strengthen Maduro’s position,” said Schreiner Parker, the vice president for Latin
America at consultancy Rystad Energy.
Chevron, on the other hand, has consistently argued that the U.S. benefits from having a domestic producer on the ground in such an important oil country.
The San Ramon, Calif.based producer has consistently lobbied for extensions to its authorization to operate in Venezuela and was in contact with U.S. officials ahead of Tuesday’s decision.
Chevron will continue to comply with laws and regulations related to its activities in Venezuela and remains committed to the integrity of its joint venture assets there, Ray Fohr, a spokesperson for the company, said in an email.
Oil production in OPEC-founding member Venezuela fell to 367,000 barrels a day in October, the lowest level seen since the 1940s, according to OPEC data from secondary sources.
Sanctions caused partners in oil fields to significantly reduce operations.
After Russia’s Rosneft PJSC and China National Petroleum stopped buying oil from the regime, Maduro has been relying mostly on another sanctioned nation: Iran. Tehran has sent oil, refinery parts and gasoline to Caracas in exchange for payments in gold.
100 years
Chevron started exploring for oil in Venezuela about a century ago. Its Pascagoula refinery in Mississippi is engineered to handle the heavy oil coming fromthe field, underscoring the importance of Venezuela in its business model.
Other U.S. majors Exxon Mobil and Conoco Phillips pulled out of Venezuela when the late Hugo Chavez tore up existing contracts and charged more taxes under a nationalization, but Chevron stuck around.