New Delhi: Chevron, America’s second largest oil company, has announced a large-scale expansion of its business in Venezuela. The announcement comes just days after US President Donald Trump unveiled a huge deal to develop Venezuela’s oil reserves and give the Pentagon a share in the profits.
$7 billion investment in Orinoco Belt
The company said it has been allocated additional fields in the Orinoco Belt, where it already has a presence. Under Chevron’s joint venture plan, more than US$7 billion will be invested over the next five years. With this, production is expected to more than double to about 6 lakh barrels per day.
Chief executive Mike Wirth said, “Chevron’s history in Venezuela goes back more than a century. Our expanded position reflects our confidence in the country’s vast resource potential and its ability to compete for investment in our portfolio. With improved conditions and additional fields, we are strengthening a portfolio that can deliver attractive low-cost oil growth, support energy supplies and create differentiated long-term value.”
Part of Trump administration’s big oil deal
This announcement came at a time when a US official had informed journalists about this move a day earlier. Chevron officials and Energy Secretary Chris Wright are expected to visit Venezuela on Wednesday, where the new investment will be formally announced, according to the official.
The official spoke on condition of anonymity under White House rules. The White House also confirmed Monday that it is partnering with North American Blue Energy Partners to take advantage of Venezuela’s oil industry.
Trump’s focus has been on Venezuelan oil since Nicolas Maduro came to power. His allies are calling it a way to reduce the Middle East’s dependence on oil.
Legal question on 100 years rights
Chevron has been operating in Venezuela since 1923 and is the only US company with a major presence there. Its joint ventures Petroindependência and Petropier operate extra-heavy oil projects in the Orinoco oil belt, while Petroboscon is in Zulia state in western Venezuela.
However, analysts have expressed doubts about this comprehensive agreement. Energy experts say it could take years to revive Venezuela’s production after years of neglect.
Questions are also being raised whether acting President Delsey Rodriguez has the legal authority to give 100-year rights over 17 oil fields with 65 billion barrels of reserves and whether the Venezuelan or US governments can cancel this deal in the future.