[HOUSTON] Chevron could grow its cash flow by as much as US$700 million a year from increasing oil production in Venezuela as the Trump administration seeks to control the South American country’s crude supplies, one analyst says.
Chevron, the only US oil major currently operating in Venezuela, has a “differentiated opportunity among peers to increase production”, Jason Gabelman, an analyst at TD Cowen, wrote in a note Friday (Jan 9). Its efforts could add between US$400 million and US$700 million a year, representing about 1 to 2 per cent of the company’s cash flow from operations, he said.
American oil executives, including representatives from Chevron, are scheduled to meet at the White House on Friday as US President Donald Trump outlines his vision for rebuilding Venezuela’s oil industry, which has been run down after decades of corruption and mismanagement.
Home to the world’s largest oil reserves, the country is an attractive long-term opportunity for Big Oil, but companies are cautious about investing in the short term due to uncertainty around security and the rule of law.
Chevron will likely boost production from its existing assets rather than commit large amounts of new capital to the country, according to the note.
“We suspect Chevron will be hesitant to invest material incremental capital to Venezuela until there is a stable government and fiscal regime,” Gabelman wrote.
Chevron’s joint ventures currently produce about 240,000 barrels a day from Venezuela, per TD Cowen. The company shares this production roughly equally with state-run Petroleos de Venezuela. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
