Chevron ‘Hopeful’ of US Approval to Continue Operating in Venezuela

Chevron, the last U.S. oil company operating in Venezuela, said Thursday it hopes to be able to remain in the Latin American nation as the Trump administration mulls whether to renew its license, expiring on Saturday, to do business there.

The administration said a decision will be made soon on the renewal of Chevron’s six-month U.S. Treasury Department license to operate in Venezuela, with billions of dollars in the company’s investments at stake. The administration in January imposed sanctions on PDVSA, Venezuela’s state-run oil company, intended to starve the country of oil revenue and force out President Nicolas Maduro.

The United States has said it considers Maduro’s re-election last year illegitimate and has recognized opposition leader Juan Guaido, who invoked the country’s constitution in January to declare himself interim president, as Venezuela’s leader.

FILE – Oil workers conduct routine maintenance on a gas plant at field Boscan, operated under a joint venture model between Venezuelan state oil company PDVSA and U.S. Chevron, outside Maracaibo City in Venezuela, May 26, 2006.

“We are still waiting on a final decision,” Chevron spokesman Raymond Fohr said, adding that the second-largest U.S. oil company “remains hopeful that General License 8 will be renewed.” A January license gave it six months to wind down operations with PDVSA (Petroleos de Venezuela).

A decision will be made before the 12:01 a.m. Eastern Time on Saturday (0401 GMT) renewal deadline, a U.S. administration official said Thursday.

President Donald Trump’s administration in January issued licenses to five companies. The other four are Halliburton Co., Schlumberger, GE’s Baker Hughes and Weatherford International. All have largely halted operations.

Financial risk

An exit would put at risk Chevron’s several billion dollars in investments, about 300 jobs and a nearly 100-year presence in Venezuela. Investments in the joint ventures totaled $2.68 billion at the end of December, according to its latest annual report.

A forced retreat from Venezuela could  trigger impairment charges on its investments, according to Jennifer Rowland, analyst with Edward Jones.

“I would expect them to take a write-down if they don’t get an extension,” Rowland said, adding that it would not be significant.

Chevron reported a loss of $51 million in the first quarter from its equity affiliates, including the Venezuelan joint ventures, compared with profit of $159 million in the same period a year earlier.

Its stakes in four joint venture operations with PDVSA produced about 42,000 barrels per day of oil and natural gas.

Until sanctions were levied, the company received dividends from the joint ventures in payment for its production. Its contracts with the joint ventures run until at least 2026.

‘Gift’ to Russians

If Chevron leaves, its assets would likely end up in the hands of Russian oil giant Rosneft, which would be counter to U.S. foreign policy goals, sources familiar with the matter said this week.

“If they pull the plug on Chevron, it’s just a gift on a big platter to the Russians,” one source said. The assets could also wind up in the hands of PDVSA or Chinese oil companies.

Guaido, the head of the National Assembly, said on Tuesday he would seek to protect Chevron’s assets in the country if Washington does not renew the license.