Don’t look now, but Big Oil is making big moves to secure positions in the expanding Venezuelan oil industry as part of the Trump Administration’s plans to revitalize the country’s economy.
On Monday, Chevron officials signed a pair of deals to expand the company’s footprint in the prolific Orinoco Belt as Shell prepares to ink a major deal of its own later this week.
Make no mistake: These deals didn’t happen in a vacuum. They are the direct result of the Trump administration’s bold decision to remove Nicolás Maduro in January, launch a $100 billion reconstruction plan for the country’s shattered energy sector, and push through sweeping reforms to Venezuela’s hydrocarbon law. After years of socialist mismanagement that turned one of the world’s richest oil nations into an economic basket case, sanity is finally returning.
Trump haters in and out of the media snickered that the big oil companies would never make big investments required under the Trump plan. Now, they are proven wrong, yet again. Why? Because, as I wrote here at the time, oil companies are risk takers by nature, and the size of the prize in Venezuela – the holder of the world’s largest oil reserves – would almost certainly overwhelm the potential risks in the final analysis.
The magnitude of that potential prize is why Chevron remained committed to Venezuela even as competitors were forced out by Hugo Chavez’s nationalization movement in 2007. And it’s why the company is now moving to expand its holdings there.
The Houston-based major agreed to an asset swap which sharpens its focus on what it does best in Venezuela: heavy crude. Out go two gas blocks, including the prized Loran offshore field with its 7.3 trillion cubic feet of reserves, and a small oil project in western Venezuela. In comes the Ayacucho 8 heavy crude area, which slots perfectly into Chevron’s existing Petropiar joint venture, the company’s largest operation in the country. At the same time, Chevron increased its working interest in the Petroindependencia joint venture with PDVSA from 35.8% to 49%.
Shell, meanwhile, is set to sign its own deal later this week for development of that same Loran field. The plan is to develop it as a single, unified project with Shell’s Manatee field, which extends across the maritime border into Trinidad and Tobago waters. That gas will help Trinidad ramp up LNG exports while giving Venezuela a much-needed new revenue stream. It’s a classic win-win that only becomes possible once ideological barriers come down and the market is allowed to function.
For those of us who have watched Venezuela’s slow-motion collapse since the socialist Chavez came to power in 1998, this moment feels like vindication. Venezuelan output cratered from over 3 million barrels per day to under 1 million under his and Maduro’s watch. The country’s once-vast infrastructure fell into disrepair as billions in potential revenue vanished into corruption and political patronage. The “21st Century Socialism” experiment turned a resource-rich nation into a humanitarian disaster and a geopolitical headache for the United States.
Now contrast that with what’s happening today under President Delcy Rodriguez: A reformed legal framework that actually encourages private investment. A pragmatic U.S. administration that understands energy is a strategic asset, not a political football. And major operators like Chevron and Shell are moving fast to deploy capital where it can generate real returns.
Trump haters will wring their hands about “blood oil” or environmental impacts or whatever fashionable concern is trending this week. They always do. But the hard truth is this: Venezuela’s oil is going to be developed. The only question is who develops it and under what terms.
The previous regime handed influence to China, Russia, and Iran. The current path puts American and European majors back in the driver’s seat, boosts supply to global markets that desperately need it and helps rebuild a stable neighbor in our own hemisphere.
This is exactly what pragmatic, America-First energy policy looks like. It’s not about slogans or virtue-signaling. It’s about results: more barrels, more revenue, more stability, and more leverage for the United States. Why, it’s almost as if President Donald Trump, Secretary of State Marco Rubio, Energy Secretary Chris Wright, and Interior Secretary Doug Burgum actually know what they’re doing. Go figure.
David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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