Chevron Builds Portfolio in Venezuela with Asset Swaps

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

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Summary

Chevron, the only U.S.-based company with a license to operate in Venezuela, is bolstering its footprint through deals with PDVSA. Asset swaps will strengthen its heavy oil position, the company said.

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Coastal JVs in Play

U.S. supermajor Chevron said it bolstered its position in heavy oil through assets swaps with the state-run oil company in Venezuela. Through its subsidiaries, Chevron received an additional 13.21% working interest in the joint venture Petroindependencia, bringing its total interest to 49%. Petroindependencia is a joint venture or Chevron and state-run Petroleos de Venezuela, or PDVSA. The joint venture operates a plant bearing its name in the coastal state of Anzoategui. According to Industrial Info Resources data, the plant can process around 40,000 barrels per day (bpd) of crude oil. Subscribers to Industrial Info Resources' Global Market Intelligence (GMI) Plant Database can click here for the plant profile.

Petropiar S.A., a separate Venezuelan joint venture in which Chevron holds a 30% stake, secured rights to develop parts of the Orinoco Belt, one of the richest oil deposits in the world. Apart from production, the joint venture operates an upgrader in Anzoategui with an annual capacity of 200,000 bpd. Industrial Info Resources issued an alert to clients on Thursday that PDVSA scheduled planned repairs on the upgrader, which helps move the heavy type of oil common in Venezuela. Subscribers can click here for the plant profile.

Industrial Info Resources is tracking the upcoming revamp of the diluent recovery unit at the plant. Subscribers to Industrial Info Resources' GMI Refining Project Database can learn more by viewing the project report.

"This asset swap marks another important step in Chevron's long history in Venezuela and reinforces our role in supporting regional energy security," said Javier La Rosa, the president of Chevron Base Assets and Emerging Countries.

Chevron is the only U.S.-based company with a license to operate in Venezuela. Since the January seizure of former President Nicolas Maduro by the U.S. military, the U.S. government has offered concessions on sanctions that make it easier to do business in Venezuela.

Through its joint ventures with PDVSA, Chevron accounts for about a quarter of total Venezuelan crude oil production, or around 260,000 bpd.

Not Just Chevron

Elsewhere, the Reuters news service reported Monday that Shell is expected to sign up to help develop the offshore gas in the waters of Venezuela and Trinidad and Tobago. Slated for possible exports as liquefied natural gas (LNG), the field has a reserve capacity of 7.3 trillion cubic feet.

Foreign companies have expressed reservations about working in Venezuela, however, given the uncertain political landscape. Though delegates from ConocoPhillips were set to visit the country, Chief Executive Officer Ryan Lance said reforms so far are "woefully inadequate."

Venezuela began a review of its energy laws in January. Preliminary guidelines for new production-sharing contracts and joint ventures were expected by March, with a final phase of review coming by the end of this month, though that date is uncertain.

Moving through trading houses such as Trafigura, sales are nevertheless on the rise. Exports in March had topped 1 million bpd, compared to February levels of around 735,000 bpd.

Economists at the Organization of the Petroleum Exporting Countries (OPEC) put production at around 903,000 bpd for February. Venezuelan oil production peaked in the 1970s at about 3.5 million bpd.

By the Numbers

• 1 million bpd in Venezuelan oil exports
• 25% of output controlled by Chevron-PDVSA ventures

Key Takeaways

• Chevron tinkers with Venezuelan portfolio
• A slow recovery for one of OPEC's founding members

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Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).