Fixed Income Analysis /

Venezuela: Chevron’s strong start and the outlook for the Venezuelan oil sector

  • An understandable sense of urgency is visible after the licence to Chevron.

  • We expect an increase of 100k bpd from Chevron’s joint ventures in 2023; risks tilted to the upside.

  • Despite potential positive spillovers, we remain sceptical of PdVSA’s capacity to lift oil output.

24 January 2023
Published byBancTrust

The permission given to Chevron to resume operations in Venezuela last November has triggered a rapid resumption of its oil-related activities in the country. The temporal and extremely fragile character of the licence has incorporated a sense of urgency that might bring about a faster-than-expected short-term recovery. The new contracts signed between Chevron and national authorities, soon after the issuance of the licence, introduce significant uncertainty to the outlook, as no details about the arrangements have been released. Even though we share Chevron’s top management cautious stance with respect to the pace of recovery, we expect an increase of 100kbpd in oil production by the joint ventures in which the American company participates.

Potential spillovers from the restart of operations of Chevron could translate into a larger expansion of total domestic oil production. Also, increasing pressures from other oil companies interested in getting paid pending debts by PdVSA, incorporate another upside risk to our baseline scenario. We, nevertheless, remain sceptic, as the capacity to raise production levels by the national oil company continues to be fairly limited.