Venezuela plans to grant more oil-production land to Chevron Corp. and Spain’s Repsol SA as the Trump administration pushes for private companies to rebuild the nation’s energy sector, according to people with knowledge of the matter.
Venezuela’s crude oil production could increase dramatically as soon as this year, U.S. Energy Secretary Chris Wright said during his visit in the South American country.
Venezuela’s interim leader is playing to three different audiences with her plans for Venezuela’s oil sector: foreign investors, the Donald Trump administration, and her own socialist supporters. None of them is happy with it.
Venezuela expects fresh oil investments of some $1.4 billion this year, which would be up from $900 million last year, interim president Delcy Rodriguez said, as quoted by Reuters.
The U.S. government has made it clear it wants to prevent the Venezuelan government from reaping any financial benefit from the country’s oil wealth, but this has proved difficult, since U.S. refiners are sizable buyers of Venezuelan crude and the chief reason why Chevron was granted that sanction exemption. Last year, imports of Venezuelan crude in the U.S. hit peaks of some 300,000 barrels daily, per data from Kpler.
Oil traded slightly lower on Friday as traders weighed trade talk optimism and the potential of more oil supply from Venezuela.
Full details of the decision were not immediately clear. The move came around the same time Washington and Caracas brokered an agreement that saw the release of 10 Americans detained in Venezuela, while 250 Venezuelans who were imprisoned in El Salvador were returned to their home country.
After coming into office, the administration of President Donald Trump has eliminated licenses for oil companies to operate in Venezuela, despite initial hints that it would continue them, with presidential envoy Richard Grenell’s visits to Caracas. This means that sanctions on state-owned PDVSA are fully back on. Chevron, the main U.S. corporation on the ground, is back to having only a secret license for minimum maintenance and security, as it still a shareholder in four joint ventures.
The rebranding of the crude has cut transportation costs for Venezuelan crude and facilitated U.S. sanction circumvention, the report noted. Before, traders resorted to ship-to-ship transfer at sea to mask the crude but now they have taken to manipulating vessels’ location signals to make it look like they are travelling from Brazilian ports instead of Venezuelan ones, data from TankerTrackers.com has shown, per Reuters.
Venezuela saw its oil exports slump by nearly 20% in April from March to the lowest level in nine months, after state-owned oil firm PDVSA canceled cargoes for Chevron, Reuters reported on Thursday, citing shipping documents and tanker-tracking data.