On Monday, Washington renewed a license allowing Chevron – the last U.S. company producing oil in Venezuela – to continue operations in that country for another three months until January 22, 2020.
The U.S. Treasury Department stated that the license does not authorize transactions related to shipments of diluents, which Venezuela needs to thin its heavy oil for processing.
#CrisisVenezolana | Durante otros tres meses, hasta el 22 de enero de 2020, @Chevron podrá seguir operando en #Venezuela, gracias a que el @USTreasury renovó este lunes una licencia a punto de vencer, aunque no autorizan transacciones relacionadas con envíos de diluyentes. pic.twitter.com/RMCeniuKCp
— Energía16 (@GrupoEnergia16) 21 de octubre de 2019
Since January 2019, after recognizing Representative Juan Guaidó as the legitimate leader of the South American country, the U.S has increased pressures against state-owned Petróleos de Venezuela S.A. (PDVSA) in its strategy to push Nicolas Maduro out of office.
Chevron expected an extension
Over the past days, there was much speculation over the possibility that Chevron would be granted an extension of its license to maintain operations in Venezuela. This waiver comes after the U.S. imposed sanctions against the country and state-owned oil company PDVSA. These initiatives are part of Washington’s efforts to push Nicolas Maduro out of power.
Chevron has repeatedly asked the U.S. government to reduce sanctions against Venezuela to continue its oil operations in the South American nation, which contains one of the world’s largest crude reserves.
Last Friday, the company based in San Ramon, California, seemed optimistic. By that moment, unofficial sources informed that the Trump administration was thinking about extending Chevron’s license to operate in Venezuela.
Currently, the future of Chevron in this country depends on U.S. President Donald Trump, who has so far renewed the license allowing the company to continue its operations in Venezuela.
The U.S. Treasury Department is looking to further limit Venezuela’s crude production to limit the socialist government’s funding sources. However, the United States also wants to maintain a presence in the country’s oil industry in case of a political transition.
Chevron has been in Venezuela for nearly 100 years. It opened its first office in the country in 1943 and later discovered oil in the Boscán field in 1946.
“We are a positive presence in Venezuela, and we are hopeful that General License 8C is renewed so that we can continue operations in the country for the long-term,” Ray Fohr, a Chevron spokesman, said. “We have dedicated investments and a large workforce who are dependent on our presence.”
The Trump administration has imposed several rounds of sanctions against Venezuela in a continued effort to limit PDVSA’s transactions and restrict Maduro’s access to oil revenue, which represents most of the country’s income.
Greater pressure against Maduro
So far, Chevron and four U.S. oil services companies are operating in Venezuela under a General License granted by the U.S. Treasury Department exempting it from Washington’s sanctions until October 25.
Halliburton, Schlumberger, Baker Hughes, and Weatherford International were also granted waivers, although with significant restrictions.
In its latest quarterly report, presented before the U.S. Securities and Exchange Commission, Chevron warned it could lose approximately $2.5 billion if this waiver expired and it was forced to leave Venezuela.
Some analysts believe that Venezuela’s oil production, already at historic lows under 600,000 barrels per day, could go down to less than 300,000 bpd if the waiver is not extended.
Several U.S. officials, including former National Security Advisor John Bolton, have argued that forcing Chevron out of Venezuela could spark a significant fall in its crude production, adding to the economic pressure on Maduro’s regime.
— World Oil Online (@WorldOil) 21 de octubre de 2019
Could this be an opportunity for Moscow?
However, other officials like Secretary of State Mike Pompeo sustain that any production fall could be short-lived if Rosneft or any other Russian or Chinese company takes control of Chevron’s assets in Venezuela.
Experts estimate that if Rosneft were to take over Chevron’s operations in the country, production could be back to current levels within 45 days.
Chevron owns a 30% share in Petropiar, a joint venture with Petróleos de Venezuela SA operating in the Orinoco Belt. It also owns a 39.2% share in Petroboscán, another joint venture with PDVSA operating in the country’s west region.
These joint ventures produced around 120,000 barrels per day in September, according to independent reports. 20 of the 25 drilling rigs currently operating in Venezuela were supplied by PDVSA. The other five are owned by the company’s joint ventures with Chevron.
Nicolas Maduro has already started to nationalize the U.S. company’s assets.
Unofficial reports state that during a meeting last month in Moscow, Maduro and Russian President Vladimir Putin discussed the possibility that Rosneft takes over Chevron’s operations in the South American country.
For more information, check Energía16