Chevron to Double Venezuela Rig Count in $7 Billion Oil Push

2:07 PM ETDeveloping

World Desk

In Short: Chevron is expanding its operations in Venezuela with a five-year plan to double the number of drilling rigs and invest over $7 billion.

Chevron is set to significantly expand its operations in Venezuela, doubling the number of drilling rigs it operates under a five-year plan aimed at boosting production to around 600,000 barrels per day. According to Julianne Geiger, a veteran energy journalist, the company plans to invest more than $7 billion through 2031, marking a substantial commitment to the country's oil sector.

The expansion comes alongside a much larger U.S.-Venezuela oil agreement, which grants North American Blue Energy Partners 100-year concessions covering 17 fields with approximately 65 billion barrels of proven reserves. This agreement, along with Chevron's own ventures, underscores the potential for significant oil production in the region.

Chevron's three Venezuelan joint ventures will benefit from international arbitration provisions, a particularly useful safeguard in a country with a history of oil nationalizations and contract disputes. The company's CFO, Eimear Bonner, highlighted the importance of these terms, stating that they provide crucial protection for the investment.

Chevron's operations in Venezuela date back to 1923, and the company has managed to stay through various challenges, including the nationalizations that pushed ExxonMobil and ConocoPhillips out in 2007. Through joint ventures with PDVSA, Chevron has maintained producing assets, staff, and infrastructure, giving it a solid foundation for its current expansion.

The plan includes access to international arbitration, which is particularly beneficial given Venezuela's history of oil sector disputes. Bonner emphasized that production costs across the expanded operations should remain below $20 per barrel, making the venture economically viable despite the political and economic challenges.

Chevron's commitment to Venezuela is part of a broader strategy to secure long-term oil supplies and maintain a presence in a region rich in oil reserves. The company's continued investment and expansion in the country reflect its confidence in the potential for significant returns on its investment, despite the risks associated with operating in a politically unstable environment.

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Chevron holds a 49% interest in that venture and has additional development rights near its Petropiar operation.

Sources

Crude Oil Prices Today | OilPrice.comlink