US oil giant Chevron to expand Venezuela operations

Chevron will invest more than $7bn through its Venezuela joint ventures to double oil production to about 600,000 barrels per day over the next five years in the South American country, the United States oil giant has said.

Chevron, the only US oil company that has a major presence in the country, said on Wednesday that it has been assigned additional acreage in the Orinoco Belt, where the company has an established position and where its Petroindependencia joint venture will expand to include two adjacent areas in the Carabobo region.

“Chevron’s history in Venezuela spans more than a century, and our expanded position reflects our confidence in the country’s deep resource potential and its ability to compete for investment within our portfolio for decades,” Chevron CEO Mike Wirth said in a statement.

The announcement comes just days after US President Donald Trump unveiled an unprecedented deal involving a fifth of Venezuela’s oil reserves, with the US government taking an equity stake in a private oil firm operating there. Chevron’s expansion is separate from that endeavour, but it further cements Trump’s efforts to expand output in Venezuela.

Venezuela has the world’s largest oil reserves, but its current output is only about 1.25 million bpd, down from the more than 3 million bpd it achieved two decades ago, following years of mismanagement and underinvestment by state-run oil firm PDVSA and US sanctions.

Venezuela’s total oil output is expected to reach 2 million bpd by the end of this decade, US Energy Secretary Chris Wright said on Wednesday.

Chevron said its new agreements also provide enhanced fiscal, commercial and legal terms to protect the long-term investments, adding that total production costs are expected to be less than $20 per barrel.

The joint venture’s infrastructure is in good shape, and development in the new areas will build off of existing facilities and pipeline infrastructure, Wirth said in a CNBC interview.