Chevron Corporation has increased production at a key Venezuela oil project to levels not seen in almost a year, despite US sanctions aimed at crippling the regime of embattled President Nicolas Maduro.
According to a Bloomberg report, Chevron has kept production going and helped repair the industrial facilities needed to refine its heavy oil into marketable crude.
The report said that the U.S. is eyeing tougher sanctions “that could target Russian producer Rosneft PJSC.” Those tougher sanctions could potentially affect Chevron’s waiver to do business in Venezuela as tensions rise between the countries.
Maduro is reported to have said on Monday that he is planning an international lawsuit against the U.S. “for damages incurred by Venezuelan companies.”
The report said, “He is also considering giving operational control to foreign producers at some fields to bring in cash and, perhaps, nudge other U.S. companies to seek access to Venezuela’s huge oil reserves.”
“Maduro’s likely goal is to make it so attractive, companies start to lobby harder in the U.S.,” Bloomberg quotes Raul Gallegos, a Bogota, Colombia-based director at Control Risks, an international consulting firm, as saying.
The report said that Chevron’s waiver, which expires in April, “has benefited countries, mitigating the collapse in Venezuela’s production and hindering further expansion by Russia and China.”
At the same time the waiver allows Chevron to remain the lone U.S. producer “in a country with an estimated 302.8 billion barrels of oil reserves and a dysfunctional state oil company that’s seen output fall by 74% since 2009 to about 792,000 barrels a day,” the article said, citing the latest OPEC report.
Meanwhile, the article reports that other U.S. oil companies say they are locked out. Ali Rahman, director of Delaware-registered Erepla Services LLC, in an interview reportedly said, “This is an America Last policy. The sanctions hurt American business interests — other than the select few granted licenses — more than anyone else.”
The article said that in 2018 Erepla entered into a potentially lucrative contract with state-owned PDVSA to provide oilfield and marketing services to three fields. But the Trump administration soon after tightened its sanctions and this led to the operations of Erepla being placed on hold.
Bloomberg reports that the site is now producing about 130,000 barrels a day of crude after being closed for parts of 2019.
The US government granted waiver allows Chevron, Halliburton, Schlumberger, Baker Hughes and Weatherford International to continue certain work with PDVSA, outside of US sanctions.
OilNOW previously reported that this will be the third three-month extension of that waiver, initially issued in January 2019, when the bulk of US sanctions on Venezuelan oil flows went into effect.
The waiver has been extended based on the argument that the presence of US companies is necessary to prevent the complete collapse of Venezuela’s oil sector, easing an expected recovery once President Nicolas Maduro was forced out of power, according to a recent report by S&P Global Platts.