Chevron Is in Prime Position to Help Unlock Venezuela’s Vast Oil Reserves
The country says its proved oil reserves top 300 billion barrels which, if true, would make its bounty the world’s largest
Chevron is positioned to rejuvenate Venezuela’s oil business, being the sole major U.S. company remaining in the country.
Venezuela’s government says its proved oil reserves top 300 billion barrels.
Chevron and its joint ventures employ approximately 3,000 people in Venezuela.
Chevron, as the only major U.S. company in Venezuela, finds itself in prime position to deliver on President Trump’s pledge Saturday to rejuvenate the Latin American country’s oil business.
The U.S. capture of strongman Nicolás Maduro has Chevron charting a new course as it clings to its position in some of the world’s most potent oil fields.
“We’re going to have our very large United States oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country,” Trump said at a press conference at Mar-a-Lago.
As the largest foreign investor in Venezuela, the oil giant has spent years navigating the country’s political and economic turmoil while its rivals pulled out—or were kicked out of the country by Venezuelan leaders.
Chevron said in a statement Saturday that it is focused on the safety of its employees and the integrity of its assets in the country.
The opportunity facing the company is huge. Venezuela’s government says its proved oil reserves top 300 billion barrels which, if true, would make its bounty the world’s largest.
Venezuela currently pumps just 900,000 barrels of oil a day following years of economic turmoil and little investment in maintaining infrastructure. Chevron is responsible for about one-third of that production.
Venezuela pumped as much as 3 million barrels a day in 2013, according to state-run company Petróleos de Venezuela, which is known as PdVSA.
Other big oil companies interested in re-entering Venezuela will almost certainly take time to evaluate the situation because the country’s government has a track record of appropriating oil assets, as it did in the 1970s and the 2000s, analysts said.
ConocoPhillips and Exxon Mobil pulled out of the country in 2007 after former President Hugo Chávez nationalized their assets. Conoco later sued the Venezuelan government for more than $20 billion; Exxon sued for $12 billion. The companies were awarded fractions of their losses in protracted arbitration proceedings.
Conoco and Exxon didn’t immediately respond to requests for comment.
“Oil companies always want oil, and Venezuela has a lot of it,” said José Ignacio Hernández, a law professor, consultant and public-debt expert at Aurora Macro Strategies. “But they need political stability, which requires more than just removing Maduro. The situation is still ongoing.”
Trump said the U.S. will “run the country” until his administration can “do a safe, proper and judicious transition.”
Chevron and its joint ventures employ about 3,000 people in Venezuela. The company pumps roughly 300,000 barrels of oil a day from three major projects across Venezuela’s Orinoco Belt in the east and one near Lake Maracaibo in the west.
The Houston company has continued to ship Venezuelan crude to the U.S. Gulf Coast even after Washington imposed a blockade on blacklisted oil tankers traveling mostly to China and Cuba.
Chevron extensively lobbied both the Biden and Trump administrations to hold on to its singular position as the only U.S. oil company operating in Venezuela.
“We are committed to the people of the country and would like to be there as part of rebuilding Venezuela’s economy in time when circumstances change,” Chevron CEO Mike Wirth said in November at the U.S.-Saudi investment summit in Washington.
Leaders of Venezuela’s democratic movement, led by María Corina Machado, have said the oil Chevron pumps there will play a big role in the country’s economic recovery.
The democratic movement is developing an economic plan that calls for Chevron and other major oil companies to raise Venezuela’s crude production by several million barrels a day in less than a decade, according to Rafael de la Cruz, director of the Washington office of Venezuela’s President-elect Edmundo González and Machado. The movement envisions PdVSA as an energy regulator refereeing a privatized oil sector.
“If Venezuela is going to grow as we think it is going to, it’s going to be basically because of massive private investment,” de la Cruz said in an interview in early December. “Chevron is going to be part of the oil industry in Venezuela, no doubt, along with many other companies that we would like to attract back to Venezuela.”