Chevron plans to double Venezuela oil output by 2031

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Chevron plans Venezuela oil expansion

Highlights

Chevron plans to invest $7 billion over five years.
Venezuelan output could reach 600,000 barrels a day.
Production costs are expected to be below $20 a barrel.
Chevron gained access to two Carabobo oil fields.

Chevron secured development rights to the Carabobo 1 and Carabobo-2-South-A fields in the Orinoco Belt, Bloomberg reported. Both fields are close to Petroindependencia, Chevron's existing joint venture in which the company holds a 49% interest.

Chevron targets major production increase

The two Carabobo fields contain billions of barrels of resources and give Chevron additional acreage alongside infrastructure it already operates. The company expects production costs in Venezuela to remain below $20 a barrel.

That cost structure is attractive against current oil prices. Brent crude has averaged nearly $87 a barrel this year, leaving substantial room between the benchmark price and Chevron's expected production costs.

Chevron plans to add roughly 300,000 barrels a day of Venezuelan production over five years. That increase alone would equal almost 30% of the country's current output of about 1.1 million barrels a day.

The additional crude is likely to strengthen supply to U.S. Gulf Coast refineries, which already process Chevron Venezuelan barrels into gasoline, diesel, and jet fuel.

Venezuela seeks to rebuild its oil industry

Venezuela holds the world's largest proven oil reserves, but years of underinvestment, operational deterioration, sanctions, and political instability have sharply reduced production.

The country pumped close to 3.5 million barrels a day in the late 1990s. Current production of roughly 1.1 million barrels remains less than one-third of that level, despite recent gains.

Chevron's position differs from that of several U.S. rivals. ExxonMobil and ConocoPhillips left Venezuela after their assets were nationalized in the 2000s, while Chevron remained and continued operating under changing sanctions restrictions.

Investment could reshape Venezuelan supply

Chevron commitment provides Venezuela with something smaller operators have struggled to supply: enough capital and technical capacity to expand production on a large scale. A $7 billion investment also signals that a major international producer sees a viable long-term commercial opportunity in the country.

Reaching 600,000 barrels a day would make Chevron responsible for a substantially larger share of Venezuelan production. The planned 300,000-barrel daily increase could also add meaningful volumes to international markets and U.S. refining supply.

Yet the expansion would not restore Venezuela to its former position. Even after Chevron's planned increase, national output would remain far below the roughly 3.5 million barrels a day reached before the industry's long decline.

We also reported Venezuela is considering an OPEC exit after decades of membership.

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