US gives Chevron another three months in Venezuela
Colby Smith in New York and Gideon Long in Bogotá
The Treasury said on Monday that Chevron — along with Halliburton, Schlumberger, Baker Hughes and Weatherford International — could continue to work in Venezuela until January 22, although they are banned from exporting diluents to Venezuela that the country needs to process its heavy crude.
Washington has effectively imposed an oil embargo on Venezuela this year in a bid to weaken President Nicolás Maduro’s grip on power. It has barred state oil company PDVSA from exporting oil to the US, stopped the import to Venezuela of diluents and urged oil companies elsewhere in the world to cut business with the government in Caracas.
When it imposed the embargo in January, it gave US companies operating there a six-month exemption. It extended that waiver for three months in July and has now done the same again.
Chevron has four joint ventures with PDVSA in Venezuela, which between them produce about 200,000 barrels of crude per day (b/d) — more than a quarter of the country’s entire oil output. The company has worked in Venezuela for almost a century. It is the last major US oil company operating in Venezuela. Rivals Exxon and ConocoPhillips pulled out a decade ago in the face of an expropriation drive by then-president Hugo Chávez.
Oil output has collapsed from well over 3m b/d in 1998 when Mr Chávez was first elected to fewer than 700,000 b/d now. The decline has accelerated on Mr Maduro’s watch, dropping 70 per cent during his six years in power.
While the US companies may be relieved the exemption has been extended, the issue will resurface again in January.
“If you're only allowed to be there for three months, you are not going to plan for the long-term,” said Russ Dallen, head of investment bank Caracas Capital Markets. “You're going to try to make as much money as you can but not invest more.”