Chevron to Double Venezuela Rig Count in $7 Billion Oil Push
Chevron plans to double the number of drilling rigs it operates in Venezuela under a five-year expansion that targets roughly 600,000 barrels per day of production. CFO Eimear Bonner said Tuesday that Chevron will add rigs under new contract terms signed with Venezuela last week. Those terms also give Chevron access to international arbitration, a particularly useful provision in a country with a…
Chevron aims to double its drilling rig count in Venezuela as part of a $7 billion expansion plan, according to a report by Oilprice.com. The company plans to increase the number of rigs to approximately 600,000 barrels per day of production over a five-year period. CFO Eimear Bonner announced this move after signing new contract terms with Venezuela last week.
These terms also grant Chevron access to international arbitration, a crucial provision in a country known for its history of oil nationalizations and contract disputes. Chevron's three joint ventures in Venezuela are projected to invest over $7 billion through 2031. The current production stands at around 290,000 barrels per day, all of which is shipped to the United States.
Chevron claims that production costs in the expanded operations will remain below $20 per barrel. Additionally, the company has secured extra acreage in the Orinoco Belt, including areas in Carabobo, which were assigned to Petroindependencia. Chevron has a 49% stake in this venture and also possesses further development rights near its Petropiar operation.
Chevron has a long-standing presence in Venezuela since 1923, persisting through the nationalizations that expelled ExxonMobil and ConocoPhillips in 2007. These companies remain owed significant sums under arbitration awards and have not yet returned. Chevron leveraged joint ventures with PDVSA to maintain its producing assets, personnel, and infrastructure when Venezuela reopened the sector.
This latest expansion coincides with a larger U.S.-Venezuela oil agreement, wherein Venezuela granted North American Blue Energy Partners 100-year concessions over 17 fields with approximately 65 billion barrels of proven reserves. The agreement also provides the U.S. government with governance rights and guaranteed access to a portion of the production.
Venezuela's National Assembly approved the agreement on September 1. While Chevron's existing production is already being transported to U.S. refineries, the new acreage lies adjacent to operations the company is already familiar with. The rig count increase allows drilling capacity to expand without waiting for a completely new operator to build a Venezuelan business from the ground up.
Chevron's target is an additional 310,000 barrels per day from its own operations within five years.
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