This weekend, Venezuela began loading 250,000 barrels of Boscan heavy crude in Bajo Grande, Zulia state, for export to the United States under loosened sanctions that let Chevron extend its commerce.
This would be the first sale of Venezuelan crude to the United States in four years since sanctions were strengthened in the wake of a 2018 presidential election that the United States claimed was manipulated in favour of Nicolas Maduro.
According to unnamed company sources and onlookers, the Beauty One tanker is slated to complete loading and depart for a US refinery on January 2.
It arrived at the port of Zulia eight days after the December 21 restart of Chevron’s Petroboscan asphaltic crude project with state-owned PdV in the same state, which is now producing approximately 10,000 b/d. Chevron accumulated crude reserves in Venezuela throughout the four years of sanctions against Maduro.
Ship tracking data does not corroborate that Chevron is the charterer of the Beauty One, a 1993-built older tanker, but many sources have confirmed that it is loading for export. In recent months, the tanker has primarily made cabotage voyages in Venezuela.
Neither Chevron nor PdV responded to a request for comment immediately.
The Beauty One is one of three ships to have arrived since December 29 as a result of the easing of sanctions.
The Chevron-chartered UACC Eagle is en route to the Jose terminal in Venezuela on January 5 with 620,400 barrels of naphtha, according to Vortexa data. This is a significant diluent for extra-heavy Orinoco crude. Venezuela has been receiving naphtha from Iran as part of an oil cooperation agreement.
Sources and ship monitoring data indicated that the Caribbean Voyager was planned to load upgraded Merey 16 or similar petroleum in eastern Venezuela’s Jose terminal beginning this weekend for Chevron.
US permits Chevron to transport Venezuelan oil
Chevron was permitted to export crude cargoes from its joint ventures in Venezuela in November 2022 as an incentive to Caracas for agreeing to resume talks between the government and political opposition.
The action will have little effect on Venezuela’s oil exports or the global oil market. In 2019, Chevron’s sales from its joint ventures with Venezuelan state-owned PdV totalled 42,000 barrels per day, the final full year before Washington imposed restrictions on US corporations operating in Venezuela.
Late in November, state-owned PdV and Chevron signed four new contracts for existing oil production joint ventures for PetroBoscan, PetroPiar, PetroIndependiente, and PetroIndependencia, but neither side disclosed the contracts’ specifics. Chevron has a 30% stake in Petropiar.
This will be the first time since Hugo Chavez’s 2006-2007 nationalisation of the energy industry that a foreign oil corporation will be permitted to operate an upgrader. Analysts anticipate that President Nicolas Maduro will make additional modifications to the country’s relationship with multinational oil companies.
Chevrons Venezuela hurdels
Chevron’s proposal to expand Venezuelan oil production to 200,000 b/d by the middle of 2023 rests on the rehabilitation of around 18,000 wells in varying levels of deterioration in the once-productive Occidente region.
According to data received by Argus from Venezuelan state-owned PdV, around 7 percent of existing wells in Occidente are operational. Many of the roughly 1,400 “Category 1” wells are producing oil at falling rates.
About 8,700 wells are classified as Category 2, which comprises non-operational wells that may only require modest repairs to become operational. According to sources knowledgeable in the field, these wells may require about $500,000 in new investment each to be sustainable.
There are almost 7,900 wells in Category 3 that require between $5 million and $6 million in investment to be economically viable.
According to the PdV report, hundreds of wells have been shut down due to a lack of reliable electricity, which affects various sections of the country. Thieves have stripped many more of their surface equipment.
Occidente production has dropped from 150,000 b/d earlier this year to roughly 90,000 b/d in November.
US sanctions have hampered most of Chevron’s activity in Venezuela in recent years. In late November, the US lifted certain sanctions after the government agreed to resume discussions with the opposition about new elections, allowing Chevron to sell crude from its Venezuela joint ventures.
