If the US relaxes sanctions in the midst of a worldwide gasoline shortage, Chevron Corporation’s (NASDAQ: CVX) desire for greater management over the petroleum it generates in Venezuela will aid the driller in increasing output and paying off debt.
Chevron to assume control of production and sale of Venezuelan oil
According to those with knowledge of the situation, the oil giant wants to assume control over the production, transportation, and sales of Venezuelan crude. As per the sources, negotiations for a contract renewal have been ongoing since late May between Tareck El Aissami, Venezuela’s oil minister, and Javier La Rosa, president of Chevron’s operations in the Latin American nation.
The sources indicated that the proposal could represent a significant shift because Chevron will assume control of all aspects of its activities in joint ventures with the government-owned energy giant Petroleos de Venezuela SA. As per the suggested plan, Chevron, based in San Ramon, California, would engage importers and suppliers, handle finance, and transmit the last payment to PDVSA via the central bank.
Chevron’s spokesperson, Ray Fohr, stated that the firm doesn’t comment on speculation or rumors and that it continues to operate in accordance with the sanctions system put forth by the U.S. Office of Foreign Assets Control.
Chevron to increase production from Venezuela once sanctions are lifted
Fohr added, “We are a constructive presence in Venezuela, where we have dedicated investments and a large workforce who are dependent on our presence. We remain committed to the safety and wellbeing of our employees and their families, the integrity of our joint venture assets, and the company’s social and humanitarian programs during these challenging times.”
Should the US relax sanctions on Venezuelan oil, a revised contract would put Chevron in a position to immediately increase production and enable it to recover the cash owed by PDVSA. According to one of the persons, Chevron may expand its output from the current level of 150,000 barrels per day to roughly 200,000 barrels per day in six months if it can negotiate an agreement with Venezuela and the Biden administration eliminates sanctions.
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