US-based major Chevron has received a six-month license from the US Office of Foreign Assets Control (OFAC) to resume oil production in Venezuela following talks between the various political factions in the country.
The US Government previously ordered Chevron and any other companies to cease drilling activities completely in 2020. By that point, Chevron was receiving a share of just 15,000 barrels a day (bpd) from Venezuelan crude production due to existing sanctions and underinvestment.
A representative for Chevron said in a statement emailed to Bloomberg:
“OFAC’s decision brings added transparency to the Venezuelan oil sector. The issuance of General License No. 41 means Chevron can now commercialize the oil that is currently being produced from the company’s Joint Venture assets.”
While Chevron, which also makes the Texaco URSA commercial vehicle oils, will not be able to drill any new wells, it will be able to perform maintenance and repair work on existing wells. It will also be allowed to import feedstock from the US, including the diluents that are needed to dilute the country’s heavier crude into a more desirable form. Furthermore, Chevron will be allowed to resume oil exports, although they must go exclusively to the US.
Venezuela is regarded as having the world’s biggest proven oil reserves, and about 10 years ago, it was producing just under 3 million bpd. This has dropped dramatically in recent years due to mismanaged oil resources and facilities and the effects of sanctions on the country.