Chevron Agrees to Asset Swap in Venezuela to Focus on Heavy Oil Projects

  • Chevron has signed two key agreements to expand operations at Venezuela's vast Orinoco Belt, including an asset swap adding an extra heavy crude area to its main project while returning an offshore gas field and a small crude area.
  • The agreements are among the first big expansion deals since the United States (U.S.) launched a $100Bn reconstruction plan for Venezuela's energy sector after capturing President Nicolas Maduro, and a sweeping reform of the country's main oil law was approved in January, encouraging foreign investment.
  • The pacts, expected to allow ⁠ the U.S. major to boost crude output and participation at the Organisation of the Petroleum Exporting Countries’ (OPEC) main oil region, were signed by company executives led by Javier La Rosa, head of Chevron's Base Assets and Emerging Countries, and officials from state-owned company Petróleos de Venezuela, S.A (PDVSA) in the presence of acting President Delcy Rodriguez.
  • The deals include the increase of Chevron's stake at one of its joint ventures with PDVSA in the Orinoco, Petroindependencia, to 49% from a previous 35.8%. The company also agreed to relinquish two gas blocks that include the coveted Loran offshore field and its stake at a small oil project in western Venezuela, while receiving a new oil area, Ayacucho 8, as part of its existing Petropiar project, also in the Orinoco, the company's largest.
  • The deals give Chevron, PDVSA's main joint ⁠ venture partner, a strong foothold to expand heavy oil projects in the country amid expected increased competition with foreign companies. Chevron's asset swap with PDVSA and its subsidiaries is "a mutually beneficial agreement, which will consolidate all parties' focus on strategic assets in the country," the company said in a release after the event.
  • Given these changes, Chevron could increase output in Venezuela by about 50% in the next ⁠ two years within its existing footprint. The company's joint ventures with PDVSA are producing 260,000 barrels per day of crude, about a fourth of the country's total output. The agreements will allow Venezuela and Chevron "to progress to increase output and secure revenue for the benefit of the people," ⁠ Rodriguez said during the broadcast event.

(Source: Reuters)