WSJ: Large oil supply from Venezuela unlikely despite easing of US sanctions
MOSCOW, November 28 – RIA Novosti. Despite the easing of US sanctions, significant oil from Venezuela is unlikely to enter the market in the near future, as US Chevron has to solve a number of technical problems, including the restoration of infrastructure. author Wall Street Journal.
Earlier in November, the US administration eased sanctions on the Latin American state by allowing Chevron to extract oil and produce oil products in Venezuela and supply them to the US. The Ministry of Finance announced that these are joint ventures that include Chevron and Venezuela’s PDVSA. The license, granted for a period of six months, does not allow paying taxes or royalties to the Venezuelan government.
The Biden administration has made a major change in policy towards Venezuela by allowing Chevron to re-produce oil in the South American country, but this decision will result in a small increase in global oil production in the short term. The newspaper states that the company must first resolve a number of technological problems and maintain the remainder of the US sanctions that need to be amended to allow more Venezuelan oil to be supplied to the market.
Chevron’s top priorities include repairing broken equipment, tackling power outages and pipeline problems, hiring hundreds of workers despite the exit of skilled personnel from the country, and addressing safety concerns.
“The amount of money needed to invest in Venezuela to recover lost production is huge,” said oil analyst José Chalhoub. According to the expert, while the amount of investment may reach 50 billion dollars, Chevron can increase production by about 20-30 thousand barrels per day in the next six months, which is not enough on the global market scale.
Also, Chevron is looking to collect more than $4 billion in debt from state-owned Venezuelan Petroleum (PDVSA) prior to the investment, which could take two to three years to recover. Analysts believe it may take at least a year for Chevron to bring production back to 200,000 bp daily in its four joint ventures with PDVSA.
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