Chevron to Invest Billions and Double Oil Production in Venezuela After US Deal

Chevron has announced plans to invest about $7 billion in Venezuela and double its oil production there following its deal with the US to expand private-sector output.

"With improved terms and additional acreage, we are strengthening a portfolio that we believe can deliver attractive low-cost oil growth, support energy supply and create differentiated long-term value," company CEO Mike Wirth said in a statement.

CNBC reported that the company has been assigned two additional oil fields in the Orinoco Belt, where most of Venezuela's reserves are located. Chevron aims to produce about 600,000 barrels per day, up from the current 280,000 barrels.

The White House also announced this week that Venezuela's government, led by interim President Delcy Rodriguez, had approved a deal granting US-backed North American Blue Energy Partners (NABEP) 100-year concessions for 17 oil fields.

NABEP is Venezuela's second-largest private oil producer and has granted the US Department of War's Office of Strategic Capital a 35% equity stake in its corporate parent. That stake will represent "hundreds of billions in value and dividends for the United States," the White House said.

"NABEP has granted the US Department of State the right to purchase, at production cost, a guaranteed 20% of the off-take from all current and future fields NABEP will operate," the White House added. It said NABEP had also "granted the US Department of State the right of first refusal to purchase the remaining 80% of its production, providing a guaranteed source of energy in our hemisphere in emergency situations."

The White House said NABEP had "developed an ambitious plan to rapidly scale production by investing up to $100 billion in new oil infrastructure in Venezuela" and would pay "an expected $200 billion in royalty and tax payments over the first 25 years, representing critical revenue and fiscal support for current and future Venezuelan governments to fund reconstruction and social development."

US President Donald Trump has said the deal will allow the United States to replenish its Strategic Petroleum Reserve, which has been largely depleted as a result of the war in Iran.

In a social media post, Trump said the "'topping out' process will begin very shortly, and is a Gift from Venezuela to the People of the United States."

Delcy Rodriguez has defended the deal, saying Venezuela will retain ownership of and sovereignty over its reserves. "The benefits are endless," she said over the weekend.

"As everyone knows, our country has the biggest oil reserves in the world. But having resources underground isn't enough. We need investment, technology, infrastructure [and] production capacity to convert this wealth into wellbeing for our people," she added in a televised address.

"It's no use having our oil reserves underground, only to appear in statistics or bookkeeping ... and for us not to be able to convert and translate them into development for Venezuela."

Originally published on IBTimes