Chevron plans to double the number of drilling rigs it operates in Venezuela under a five-year expansion that targets roughly 600,000 barrels per day of production.
CFO Eimear Bonner said Tuesday that Chevron will add rigs under new contract terms signed with Venezuela last week. Those terms also give Chevron access to international arbitration, a particularly useful provision in a country with a long history of oil nationalizations and contract disputes.
Chevron’s three Venezuelan joint ventures plan to invest more than $7 billion through 2031. Current production is about 290,000 bpd, all of which is exported to the United States. Chevron says production costs across the expanded operations should remain below $20 per barrel.
The company also received additional acreage in the Orinoco Belt, including Carabobo areas assigned to Petroindependencia. Chevron holds a 49% interest in that venture and has additional development rights near its Petropiar operation.
Chevron has been in Venezuela since 1923 and stayed through the nationalizations that pushed ExxonMobil and ConocoPhillips out in 2007. Those companies are still owed billions under arbitration awards and have yet to return. Chevron kept operating through joint ventures with PDVSA, giving it producing assets, staff and infrastructure already on the ground when Venezuela reopened the sector.
The expansion lands alongside a much larger U.S.-Venezuela oil agreement announced last week. Venezuela granted North American Blue Energy Partners 100-year concessions covering 17 fields with about 65 billion barrels of proven reserves. The agreement gives the U.S. government governance rights and guaranteed access to part of the production, according to the White House. Venezuela’s National Assembly approved the agreement September 1.
Chevron’s barrels have a much shorter runway.
Its existing production is already reaching U.S. refineries, the new acreage sits beside operations Chevron already knows how to run, and doubling the rig fleet increases drilling capacity without waiting for an entirely new operator to build a Venezuelan business from scratch.
The target is another roughly 310,000 bpd from Chevron alone over five years.
By Julianne Geiger for Oilprice.com
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