Español

 

Guyana


Trinidad
& Tobago




Very usefull links



PW
Bookstore





News links

AP

AFP

Aljazeera

Dow Jones

Oil price

Reuters

Bloomberg

Views and News
from
Norway

 

 

 

Venezuelan oil output could be halved without Chevron et al waiver extension

talcual

White House sees waiver end as tool to pressure Maduro

- Waiver for Chevron, four services companies ends October 25
- Biggest impact may be on 200,000 b/d Petropiar project

By Brian Scheid / Platts

WASHINGTON
Petroleumworld 10 15 2019

Venezuelan oil production, already averaging a historic low near 600,000 b/d, could quickly plummet below 300,000 b/d if the Trump administration allows a waiver for Chevron and four US oil services companies to expire next week, analysts told S&P Global Platts.

"I think you'd see it go certainly to under 300,000 b/d within a month," said Neil Bhatiya, an associate fellow with the Center for a New American Security. "The question after that is whether and how fast there is backfilling by Chinese, or, more likely, Russian state firms. It will take a while though, so a Chevron-less Venezuela will probably be in the [sub-300,000 b/d] zone for the remainder of the calendar year."

At issue is a general license issued by the US Treasury Department on January 28 as the administration unveiled its most punitive sanctions on Venezuela's oil sector. The waiver allowed Chevron, Halliburton, Schlumberger, Baker Hughes, and Weatherford International to continue certain work with PDVSA, Venezuela's state oil company, while those sanctions were in place. The waiver, which was granted a 90-day extension in July, expires on October 25

A spokesman with Chevron said the company was still waiting for a decision on the waiver from the Trump administration. Spokesmen for the White House and Treasury did not respond to requests for comment.

Joe McMonigle, an analyst with Hedgeye Risk Management, said that the 90-day extension Treasury granted Chevron and other companies in July was likely the last and only extension for the waiver and served as more of a "wind-down period" for those US companies to prep their departure from Venezuela's oil sector.

Chevron "still prefers a waiver and most likely lobbying for it," McMonigle said. "But the reality is, the administration wants to ratchet up pressure and this is one of the few tools left in the toolbox."

Kevin Book, managing director with ClearView Energy Partners, said the Trump administration may increasingly oppose a waiver extension due to political sensitivities, particularly negative views voters may have of perceived leniency toward the Maduro regime. Any extension may require National Assembly leader Juan Guaido, who the US recognizes as Venezuela's legitimate president, to provide the administration "political cover" by publicly calling the Chevron extension a necessity for Venezuela's economy, Book said.

QUARTER OF RIGS

Andrew Stanley, an associate fellow with the Center for Strategic & International Studies, said about one quarter of Venezuela's active drilling rigs support joint-venture projects involving the US companies operating in Venezuela under the soon-to-expire waiver.

"If the waiver expires it will certainly have an impact on operations and production for PDVSA," Stanley said.

Chevron, a presence in Venezuela for nearly a century, currently works with PDVSA on four joint-venture operations in western and eastern Venezuela, including three heavy or extra-heavy crude oil projects, according to the company's website. Chevron's biggest project is Petropiar in the Orinoco Belt, which produces about 200,000 b/d, including an estimated 40,000 b/d by Chevron and 160,000 b/d by PDVSA.

Chevron's projects, however, are operating well below capacity, making up as little as 10% of the country's roughly 600,000 b/d output, according to Francisco Monaldi, the Latin American energy policy fellow at Rice University's Baker Institute for Public Policy.

Rosneft or a Chinese company may be willing to operate Petropiar if Chevron's waiver is allowed to expire, which could prevent oil output from falling more than 25,000 b/d to 50,000 b/d in the near term. But Venezuela's current constraint is sales, not production, Monaldi stressed.

UNABLE TO SELL

"They are unable to sell due to sanctions and their on-ground inventories are at capacity," Monaldi said, adding that floating inventory has reached record highs as tankers have become less available and more costly. "So given that situation they will have to close output regardless of what happens with Chevron unless the secondary sanctions enforcement eases."

Monaldi said he expects Venezuelan oil output to continue to decline through this year, even if the waiver is extended.

Earlier this year, S&P Global Platts Analytics forecast Venezuelan oil output to fall to 375,000 b/d by the end of next year, in its low-case scenario, under which Maduro retains power, the US imposes secondary sanctions similar to its Iran oil sanctions, and creditors accelerate their pursuit of PDVSA assets.

Stanley with CSIS said the biggest issue for the Venezuelan oil sector remains President Trump's August 5 order which placed a full economic embargo on the Maduro regime and served as a formal warning to Russia and China to end their financial support of the embattled government.

That order caused PDVSA's crude oil export to drop below 500,000 b/d in September, as buyers' fears of enforcement action from the US Treasury increased.

"This combined with refinery runs that continue to fall has seen storage levels at export facilities and upgraders build significantly, which is causing significant operational issues for PDVSA," Stanley said.

 



Story by Brian Scheid from SPGlobal Platts.

spglobal.com/platts / 10 14 2019

________________________


We invite you to join us as a sponsor.Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.

 

________________________

 

Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions Petroleumworld.com as the source.

Other stories you have to get authorization by its authors. Internet web links to http://www.petroleumworld.com are appreciated.

Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!

We invite all our readers to share with us
their views and comments about this article.

Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1


TOP

Contact: editor@petroleumworld.com,

Editor & Publisher: Elio Ohep/
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2019, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2019, Petroleumworld   / Elio Ohep - All rights reserved

This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.