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Chevron looks to Biden to keep foothold
in Venezuela


Chevron last U.S. oil major in Venezuela

- Chevron wins waiver to keep essential operations until June
- Waiver also benefits Halliburton, Schlumberger, Baker Hughes

By Peter Millard and Lucia Kassai/Bloomberg

Petroleumworld 11 18 2020S

Chevron Corp. has won more time in Venezuela and is now waiting on President-elect Joe Biden to see if duking it out in the oil-rich country has been worthwhile.

The U.S. Treasury Department extended until June 3 its authorization for Chevron and oil-service providers Halliburton Co. , Schlumberger Ltd. , Baker Hughes Co. and Weatherford International Plc 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 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 on Nicolas Maduro's regime.

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 bi-partisan support in the U.S. and among Venezuela's neighbors.

“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, California-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, said a person familiar with the company's outreach efforts, who asked not to be named because they are not authorized to discuss the matter publicly.

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 Corp. 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 from the field, underscoring the importance of Venezuela in its business model.

Other U.S. majors Exxon Mobil Corp. and ConocoPhillips pulled out of Venezuela when the late Hugo Chavez tore up existing contracts and charged more taxes under a nationalization, but Chevron stuck around and was investing about $700 million a year even after Chavez took over operational control.

The company has spent more than $100 million on social programs in the country in the past 10 years, but its share of production from two Venezuela projects fell 16% in 2019 to 35,300 barrels a day, a fraction of its global output.

Chevron's shares were down 2.2% at $87.03 as of 2:36 p.m. in New York.




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