US Wants Venezuela's Oil Again

Since the Trump administration helped oust Nicolás Maduro from power, Chevron has made a move into the Venezuelan market. Chevron is putting $7 billion into Venezuela over the next five years to double its oil production there.

Chevron and PDVSA will up production to 600,000 barrels a day

Chevron and PDVSA (Venezuela state oil company) agreed on new terms for the joint ventures they run together in the country, together, because foreign companies can't produce oil in Venezuela on their own. With this new deal, these 2 companies are going to raise their production to 600,000 barrels a day. Chevron also secured the rights to develop two new oilfields in Carabobo, part of the Orinoco Belt, one of the world's largest heavy-oil regions, which is located right next to land Chevron already operates.

Chevron expects overall costs for Venezuelan oil to remain below $20 per barrel, Chevron's current production in Venezuela is 280,000 b/d, up from just 50,000 b/d y a few years ago, so the new $7 billion plan would roughly double production from current levels.

What Happened

This is a grand larceny in broad daylight, wrapped up in an explanation - it's better US controls Venezuela's oil than China or Russia. Chevron never left Venezuela, even when the US had heavy sanctions on the country blocking most business there, so when Maduro sold out his country, US is free to encourage investments again, and since Chevron is already there - it's in the bag.

It’s not the first try of US to put its hands on Venezuela's oil.

ExxonMobil and ConocoPhillips are still feeling the effects of the last wave of asset expropriations in Venezuela, that is why they are still in wait and see mode.

Before Chevron invests even more money in Venezuela, it needs the right to take disputes to international arbitration, rather than relying only on Venezuelan courts. Because Venezuela has a history of seizing foreign companies' oil assets without “fair” compensation. So even though US has removed Maduro and kind of created more suitable conditions, Chevron still doesn't fully trust that its investment is safe unless it has strong legal protection written into the deal.

Don't assume Venezuela is now low risk, the assets can be seized again.

Same with other countries’ companies - Eni and Repsol have the idea of scaling output from 12,000 b/d to 200,000 b/d or more, but haven't committed to an actual investment plan yet. BP and Shell have both announced new Venezuelan projects this year too, mostly offshore gas rather than crude.

Vultures are waiting.

How US is Planning to Secure its Venezuelan Oil Appetites

US is backing a venture led by Alejandro Betancourt, he owns Venezuela's second largest private oil company, controls a fifth of the country's oil reserves and is now hunting for investors across 17 oilfields, target is $100 billion in outside capital.

These steps are politically close to opening up relations between the United States and Venezuela.