Chevron Corp. is gearing up to expand its operations in Venezuela in anticipation of a possible easing of U.S. sanctions on the country as oil prices soar following the Russian invasion of Ukraine, according to three people familiar with the matter.
The oil company had minimized its presence in Venezueladelegating most of the decisions to the state company PDVSAafter Washington toughen sanctions in 2020. As a first step toward expansion, Chevron is beginning to form a commercial team to market Venezuelan crude, the sources said.
Once approved, the company also aims to take operational control of four joint ventures it shares with PDVSA without initially seeking an increase in its shareholding, two of the people said. Chevron and other PDVSA partners have called for greater governance for years.
US officials have made it clear to Chevron executives that any easing of sanctions depends on the Venezuelan president, Nicholas Madurotake steps such as freeing more imprisoned Americans and setting a firm date for restarting dialogue with the opposition, according to two of the sources.
Increased oversight by Chevron of the oil fields in which it is involved could reinvigorate Chevron’s crude production and exports. Venezuela after years of underinvestment and sanctions, which have brought down extraction to some 755,000 barrels per day (bpd) last month from 2.3 million bpd in 2016.
To pave the way United States is in the process of drafting a new license that would allow Chevron to take on a more active role in Venezuela, a source said. Washington considers issuing similar authorizations to pay debt with oil for the Spanish company Repsol and the Italian Eni SpA .
Chevron declined to comment, but reiterated in a statement that its operations in the country comply with US sanctions and remain “a constructive presence in Venezuela”.
PDVSA and Venezuela’s oil ministry did not respond to requests for comment.
A spokesman for Department of State said Washington “does not foresee sanctioning actions”but added: “We have made it clear that we would review some sanctions policies if the Venezuelan parties made significant progress in negotiations towards a democratic solution.”
The US Treasury Department did not immediately respond to a request for comment.
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High-level diplomatic talks between United States and Venezuelaa close ally of Russiaquietly restarted this month after the invasion of Ukraine by Moscow.
Maduro last week authorized the release of two imprisoned Americans, but Washington has insisted that others must be freed.
Maduro has also expressed his willingness to resume dialogue with the opposition after suspending talks in Mexico in October, but US officials want a firm commitment to discuss holding free elections.
The United States imported 670,000 bpd of Russian oil and refined products in 2021. One of the few countries in a position to replace these imports is Venezuela. Before the sanctions, its oil went mainly to the refineries of the United States Gulf Coast.
Chevron is applying to the US government for a license broad enough to take operational control of its joint ventures, a first step toward restoring oil production and exports, and determining where the oil is shipped, two sources said.
No date has been set for the issuance of the authorization, but the firm has begun making preparations for its employees to obtain Venezuelan visas in Aruba. From there they would go to Caracas as long as he treasure ease sanctions, the people said.
Chevron seeks to begin moving Venezuelan oil to the United States and other refineries as soon as next month. The timing could be critical: the US ban issued last week on Russian imports means that oil from that country can continue to reach the country until April 22.
“Ever since Venezuelan barrels were banned from the United States in 2019, and Colombia and Mexico reduced their crude exports to the United States, Russian barrels have been feeding Gulf refiners”said a person involved in the talks.
The barrels marketed by Chevron could help PBF Energy, Valero Energy and Philips 66 fill the void, the source said. All operate heavy oil processing units.
Chevron has been in parallel talks with PDVSA to expand the governance of their joint ventures. But any agreement without reforms in Venezuela’s oil legislation, which requires PDVSA to be the majority shareholder in any joint venture in the sector, would be limited to temporary agreements between the parties.
Although PDVSA president Asdrúbal Chávez supports an expanded operational role for Chevron, some senior Venezuelan officials are resisting the change, three sources familiar with the matter said. Bloomberg News previously reported that Chavez held talks with Chevron executives.
Source: Gestion
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