Chevron and Shell are reportedly close to sealing deals for oil production in Venezuela following the United States’ takeover of the country’s energy industry, Reuters wrote, citing unnamed sources. Both companies had already secured preliminary deals with the Venezuelan authorities.
Per the sources, Chevron is in talks to expand production at its Petropiar joint venture operation with PDVSA, tapping an adjacent deposit to the one currently under exploitation. The supermajor is currently seeking to negotiate lower royalty rates for the new deposit, Reuters also said in its report, adding it would also seek additional incentives made available under Venezuela’s new oil law.
If the deal is finalised, Chevron would become the largest private producer of heavy crude in Venezuela’s Orinoco Belt.
Shell, meanwhile, is in talks for the development of fields in eastern Venezuela, in the Monagas North area. Reuters noted that the area contains some of Venezuela’s few deposits of light and medium crude. Shell also has plans for developing natural gas resources in Venezuela, both offshore and onshore, the company told Reuters in a statement concerning the news of the negotiations.
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The new law, approved by parliament earlier this year, stipulates that private companies “will assume full management of the activities at its own expense, account, and risk, after demonstrating its financial and technical capacity through a business plan” that will be subject to approval by the Venezuelan oil ministry. The ownership of the resources to be developed by private companies, however, will remain with the Venezuelan state.
The new law also caps royalty rates at 30% but allows the government to set individual royalty rates for projects based on factors such as investment needs and competitiveness. Following the adoption of the new law, Venezuela’s interim president Delcy Rodriguez said she expected fresh oil investments of as much as $1.4 billion this year.
By Irina Slav for Oilprice.com
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