The main U.S. oil companies will meet today at the White House to evaluate a possible investment plan aimed at accessing and operating part of the Venezuelan oil reserves. The meeting will be attended by senior executives from Chevron, Exxon Mobil and ConocoPhillips.
The meeting has been described by White House spokespersons as an “initial instance of dialogue” with representatives of the private sector. The objective is to analyze the opportunities offered by Venezuela in the current context of the international energy market.
A strategic market with great potential
Venezuela has one of the largest crude oil reserves in the world, with around 20% of the global total, however, its current production level represents barely 1% of the world’s supply, according to recent OPEC data. The causes: years of underinvestment, infrastructure deterioration and technical restrictions.
In view of this scenario, the U.S. government seeks to promote the participation of local companies in a plan to reactivate the Venezuelan energy sector, with supply projections for the U.S. market.
Companies called
Chevron is currently the only U.S. company that maintains active operations in the country, thanks to a valid license. Exxon Mobil and ConocoPhillips abandoned their Venezuelan assets in 2007 and have expressed interest in re-entering the market if legal and commercial stability is guaranteed.
According to reports, an agreement is being analyzed to receive between 30 and 50 million barrels of Venezuelan oil, which would be sold at market price to refineries in the United States.
New conditions for investment and production
Department of Energy sources said that a combination of technical and commercial measures are being studied to facilitate the investment process:
- Supply of U.S. light crude oil to blend with Venezuelan heavy oil
- Authorization to send specialized and technical teams
- Modernization of production and transportation facilities
The plan also contemplates a progressive scale of production, with expectations of increasing production by several hundred thousand barrels per day in the short term, and long-term plans that will require investments in excess of US$100 billion.
Participation of European companies
The Spanish company Repsol, which operates in Venezuela alongside Italy’s ENI, has also been invited to the meeting. Both companies have energy compensation agreements with PDVSA and hold significant stakes in joint production projects in the country.
Repsol expects to renegotiate contractual terms and resolve outstanding debts related to previous shipments.
Opportunities and challenges for the sector
This is still a developing story, but the renewed interest in Venezuelan crude responds to the goal of stabilizing fuel prices in the United States and reducing dependence on other markets. At the same time, companies face technical and financial challenges due to the current state of assets in Venezuela.
However, the return potential is considerable. Venezuela has high quality crude in several basins, and its strategic location facilitates transportation to strategic infrastructures bordering the country.
Source: infobae