Chevron to expand Venezuela operations with $7bn investment

Chevron plans to spend more than $7 billion expanding its Venezuelan operations and doubling production to about 600,000 barrels per day over the next five years.

The US oil company said it had received additional acreage in Venezuela’s Orinoco Belt. Its Petroindependencia joint venture will expand into two neighboring areas in the Carabobo region, building on Chevron’s established presence there.

“Our expanded position reflects our confidence in the country’s deep resource potential and its ability to compete for investment within our portfolio for decades,” Chevron chief executive Mike Wirth said in a statement. He later told CNBC that the existing infrastructure would make the expansion cheaper and faster than developing a new site.

“Our ability to grow at low cost is quite different than if we were going into a greenfield area that didn’t have roads, that didn’t have water, that didn’t have power,” Wirth said.

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Chevron’s history in Venezuela spans more than a century, and our expanded position reflects our confidence in the country’s deep resource potential and its ability to compete for investment within our portfolio for decades.

Chevron said the new agreements include improved fiscal, commercial and legal terms to protect long-term investments. Total production costs are expected to remain below $20 per barrel.

The announcement follows a deal unveiled by US President Donald Trump involving a fifth of Venezuela’s oil reserves and a US government equity stake in a private oil company operating there. Chevron said its expansion is separate, although it adds to efforts to increase production in Venezuela.

Venezuela holds the world’s largest oil reserves, but produces about 1.25 million barrels per day, down from more than 3 million two decades ago. US Energy Secretary Chris Wright said total output could reach 2 million barrels per day by the end of the decade. ENI, KEO Capital and Primavera are also expected to sign energy agreements, according to two people familiar with the preparations.

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Our ability to grow at low cost is quite different than if we were going into a greenfield area that didn’t have roads, that didn’t have water, that didn’t have power.