Chevron will invest more than $7 billion through its Venezuela joint ventures to roughly double the country's oil production to about 600,000 barrels a day over the next five years, the company said. The plan expands Chevron's Petroindependencia joint venture into two adjacent areas of the Carabobo region, part of Venezuela's Orinoco Belt.
Chevron CEO Mike Wirth said the company's century-plus history in Venezuela and the country's resource potential make the position competitive for investment within Chevron's portfolio "for decades." The new agreements also carry enhanced fiscal, commercial and legal terms meant to protect the investments, Chevron said, and total production costs are expected to come in under $20 a barrel.
Building off existing infrastructure
Wirth told CNBC that the joint ventures' infrastructure is already in place, so development in the new Carabobo areas will build off existing facilities and pipelines. He contrasted that with a "greenfield" site lacking roads, water and power, saying the existing buildout makes low-cost growth possible in a way it would not be otherwise.
Venezuela holds the world's largest oil reserves but currently produces about 1.25 million barrels a day, down from more than 3 million barrels a day two decades ago, following years of mismanagement and underinvestment by state oil company PDVSA. U.S. Energy Secretary Chris Wright said Venezuela's total output is expected to reach 2 million barrels a day by the end of the decade.
Chevron's expansion is separate from the deal Donald Trump unveiled days earlier, which covered a fifth of Venezuela's oil reserves and gave the U.S. government an equity stake in a private oil firm operating there. It adds to Trump's broader push to raise Venezuelan output.
Other companies signing this week
Besides Chevron, oil producer ENI, investor KEO Capital, and energy firm Primavera, co-founded by Fred Ehrsam, are among the companies expected to sign energy agreements in Venezuela as soon as Wednesday, according to two people close to the preparations. Most of the agreements involve project expansions negotiated as part of the migration of dozens of energy contracts to new terms under a sweeping oil reform approved in January. Wright arrived in Caracas late Tuesday, and Venezuela's oil minister, Paula Henao, is expected to oversee the signings.
Chevron's century in Venezuela
Following the U.S. capture and removal of former President Nicolas Maduro from office in January, Trump pushed a $100 billion plan to rebuild Venezuela's energy sector and urged U.S. oil companies to invest. Chevron's Venezuela operations have continued for more than a century, while ExxonMobil and ConocoPhillips exited the country in 2007 after their assets were nationalized under the government of Hugo Chavez, and have remained on the sidelines.
Chevron has operated in Venezuela since 1923 and runs three joint ventures:
- Petroindependencia, in the Orinoco Belt (the venture expanding into new Carabobo areas)
- Petropiar, also in the Orinoco Belt
- Petroboscan, in western Zulia state
The new Carabobo sites add to areas where the joint ventures are already increasing extra-heavy oil production.
