Chevron signed two key agreements on April 13 to expand operations at Venezuela's vast Orinoco Belt, including an asset swap adding an extra heavy crude area to its main project while returning an offshore gas field and a small crude area, executives and officials said at an event.
The agreements are among the first big expansion deals since the U.S. launched a $100 billion reconstruction plan for Venezuela's energy sector after capturing President Nicolas Maduro, and a sweeping reform of the country's main oil law was approved in January, encouraging foreign investment.
The pacts, expected to allow the U.S. major to boost crude output and participation at the OPEC country's main oil region, were signed by company executives led by Javier La Rosa, head of Chevron's Base Assets and Emerging Countries, and officials from state-owned company PDVSA in the presence of acting President Delcy Rodriguez.
The deals include the increase of Chevron's stake at one of its joint ventures with PDVSA in the Orinoco, Petroindependencia, to 49% from a previous 35.8%.
The company also agreed to relinquish two gas blocks that include the coveted Loran offshore field and its stake at a small oil project in western Venezuela, while receiving a new oil area, Ayacucho 8, as part of its existing Petropiar project also in the Orinoco, the company's largest.
The deals give Chevron, PDVSA's main joint venture partner, a strong foot to expand heavy oil projects in the country amid expected increased competition with foreign companies.
Chevron's asset swap with PDVSA and its subsidiaries is "a mutually beneficial agreement, which will consolidate all parties' focus on strategic assets in the country," the company said in a release after the event.
Chevron executives said in January the firm could increase output in Venezuela by about 50% in the next two years within its existing footprint. The company's joint ventures with PDVSA are producing 260,000 barrels per day of crude, about a fourth of the country's total output.
The agreements will allow Venezuela and Chevron "to progress to increase output and secure revenue for the benefit of the people," Rodriguez said during the broadcast event.
Another energy major progressing to rapidly expand in Venezuela, Shell is expected to sign a separate deal later this week to develop the Loran gas field, which extends into Trinidad and Tobago, as a single project with its Manatee field, sources said.
The possible reassignment of the area would provide the fastest alternative to start gas output at the 7.3 trillion-cubic-foot field, whose gas Trinidad needs to produce and export liquefied natural gas.
