Chevron to Receive American Crude from Canada's Frontera

Written by Daniel Graeber for IIR News (Sugar Land Texas)

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Summary

Chevron agreed to pay for unspecified volumes from the Canadian company Frontera up front. Frontera has a deep bench in the Americas.

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Heavy, Sour Slates Likely for Chevron

Canadian energy company Frontera (Calgary, Alberta) said it would receive up to $120 million in pre-payments from Chevron (Houston, Texas) in exchange for crude oil sourced from its operations in the Americas.

Some $80 million of that is in advance payment for an unspecified amount of crude oil for a period of two years. Frontera did not provide specific details about the origin of the crude, adding only that the agreement was through its Colombian subsidiary.

"The company may request an additional $40 million advance for up to six months on a fully-committed basis," it added in a Monday statement.

Chevron offered no details of its own, though it's possible the crude could find a home in North America, where the U.S. refining sector is tailored to run the heavier types of crude oils such as Colombia's Vasconia and Rubiales.

During the seven-day period ending December 19, the United States imported 122,000 barrels per day (BBL/d) on average from Colombia, making it the fifth-largest supplier by volume behind Iraq. Canada is the top foreign supplier of crude oil to the U.S. economy, with deliveries running close to 4 million BBL/d.

From Colombia, meanwhile, Frontera has 19 assets. During the three-month period ending September 30, the company pegged its 2025 guidance for Colombian output at between 39,000 and 39,500 barrels of oil equivalent per day (Boe/d).

It averaged 39,240 Boe/d during the period, a 3% increase over the same period last year. That came despite productions issues related to historical rainfall averages in the region. Colombia is the rainiest country in the world.

Frontera operates the Puerto Bahia crude oil and refined products terminal in the South American nation, along with a handful of other assets.

Mixed Trends Upstream

Colombia's own figures show net production averaged 750,000 BBL/d in August, about 3.5% less than the same time last year. Oil volumes averaged 747,000 BBL/d over the first eight months of the year, a drop of 4.3% compared to last year.

The Rubiales oil field, the nation's largest, saw production declines as well, with an output of 97,000 BBL/d in August compared to 100,000 BBL/d last year.

However, production from the Akacias, La Cifra, Indico, Quifa and Cano Sur oil fields was 8.5% higher year-on-year, with volumes of 139,000 BBL/d in the first eight months of the year offsetting some of the losses seen elsewhere.

Colombia holds enough oil reserves to sustain production for around seven years, though President Gustavo Petro froze all new exploration licenses after taking office in 2022. Companies with existing licenses can continue their upstream activity, however.

Frontera, meanwhile, said that its spending forecast was "tightened." It's been on something of a divestment spree, spinning off its Colombian infrastructure into two independent companies -- Frontera Exploration & Production and Frontera Infrastructure.

Chevron, for its part, is facing headwinds of its own after leaving its campus in San Ramon, California, for Houston. The company reported net income during the third quarter of $3.54 billion, 21% below the same period last year. The loss was attributed to $235 million in transaction costs tied to the acquisition of Hess Corporation (New York, New York) and lower crude oil prices.

The company reported early this month that it planned to spend between $18 billion and $19 billion for 2026. That's at the low end of its long-term guidance range of between $18 billion and $21 billion.

About half its spending plan targets U.S. operations.

Key Takeaways

• Chevron pays upfront for South American crude
• Colombia produces a heavy, sour crude oil
• Frontera tightened its belt in the third quarter

By the Numbers

• 750,000 BBL/d net production from Colombia
• $80 million advance payment from Chevron
• 19 assets for Frontera in Colombia

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