- Chevron is set to wind down its operations in early April, although analysts suggest the corporation could secure an extension or a new license.
By Ricardo Vaz
CARACAS, (venezuelanalysis.com) – The Nicolás Maduro government is courting international partners ahead of an anticipated oil industry setback following a tightening of US sanctions.
On Tuesday, the Venezuelan president led a televised meeting dedicated to the energy sector alongside high-ranking officials and touted the country’s call for outside investments.
“I can declare, to the full extent of my constitutional faculties […] that Venezuela is open to all foreign investments in oil, natural gas, petrochemicals and refining,” he said. “We have our doors open for the entire world to come, produce and make profits.”
Venezuela’s oil industry has been plagued by underinvestment, as well as lack of maintenance and a brain drain, with the issues heavily compounded by US economic coercive measures. Despite the Maduro government offering ample benefits for foreign investment, Washington’s threat of secondary sanctions has driven away even non-US corporations.
During the broadcast, Maduro reviewed several Venezuelan projects and called on the nation’s industries to draw up plans built on “production, domestic supply and exports.”
“We have all the conditions to continue growing with our own efforts,” the president concluded.
The country’s most important economic engine is bracing for the impact of the Donald Trump administration’s decision to force Chevron to cease its activities by April 3. On March 4, the US Treasury Department issued General License 41A (GL41A) granting the oil giant a 30-day period to wind down its Venezuela activities.
The withdrawal of Chevron’s sanctions waiver undid the Biden administration’s only significant departure from its predecessor’s “maximum pressure” campaign that imposed financial sanctions, an export embargo, secondary sanctions and a raft of other measures against the Venezuelan oil industry.
European companies Maurel & Prom (France), Repsol (Spain) and Eni (Italy) are likewise expected to be given short windows to close their energy projects in Venezuela. The firms increased their presence in recent years with Washington’s approval.
The Trump White House’s sanctions ramp-up contrasted with an earlier approach of engagement with the Maduro government. The administration’s Special Envoy Richard Grenell claimed that the deportations of Venezuelan migrants would resume on Friday. Caracas had announced the suspension of cooperation with the US regarding repatriation flights earlier this week.
Impact on production
Chevron CEO Mike Wirth has called for a more “durable and consistent” US policy regarding oil operations abroad that does not “swing from one extreme to the other.” However, he reiterated that the company will “abide” by the US Treasury’s directives when it comes to Venezuela.
At the same time, Chevron’s contractors in Venezuela have maintained their work despite the looming deadline. Analysts have argued this could be a sign of the corporation’s confidence in securing an extension or a new license.
The California-headquartered firm currently holds minority stakes in four joint projects with Venezuelan state oil company PDVSA. Combined, the ventures currently produce over 200,000 barrels per day (bpd) of crude, roughly a quarter of the country’s total.
Chevron’s exit is expected to deal an immediate blow to Venezuela’s oil output, with possible repercussions in terms of fuel shortages, foreign currency supply and inflation.
The latest OPEC monthly report placed the Caribbean nation’s February output at 918,000 bpd, according to secondary sources. The figure rose 6,000 bpd compared to January. For its part, PDVSA reported a production of 1.025 million bpd, down from 1.031 million bpd the prior month.
Venezuela’s output remains around the highest registered since early 2019. Exports likewise inched forward in February, averaging 934,000 bpd, according to Reuters. China remains the top destination for Venezuelan crude.
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