Chevron could get approval to ramp up oil production in Venezuela

Three well-placed unnamed sources have told Reuters that Washington could grant Chevron approval to significantly boost oil production in Venezuela as early as this weekend, if the government of Nicolas Maduro resumes talks with the opposition.

This potential would mean an easing of sanctions against Venezuela at a time when the United States is pushing for higher oil production to ease soaring prices.

Allowing Chevron to play a key role in increasing Venezuela’s oil production has been used as leverage to force talks between the Maduro government and the opposition.

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Over the weekend, talks are scheduled to take place between Maduro’s government and the opposition in Mexico City, with a U.S. presence.

Easing sanctions on Venezuela is among the only options left to the Biden administration to increase oil production. OPEC+ has refused to heed Washington’s calls for a production hike; instead, cutting production by 2 million bpd through the end of the year. Sanctions will not be eased on either Russia or Iran, either, and American shale producers have maintained discipline and resisted calls for a production ramp-up.

Venezuela is home to the largest oil reserves in the world, at 303 billion barrels. However, Western oil companies fled under the nationalization regime of Hugo Chavez and U.S. sanctions eventually caused the oil industry to all-but collapse.

Venezuela’s state-run PDVSA oil company produced only 666,000 bpd as of September this year, compared to around 3.5 million bpd it was pumping before Chavez. Returning Venezuela to its former glory requires the involvement of Western supermajors, and Chevron is the only one remaining in the country.

Chevron has been seeking permission from Washington to take control of four joint ventures with PDVSA, while that authorization has been delayed by U.S. attempts to overthrow Maduro, who was controversially re-elected in 2018.