Chevron's Long Game In Venezuela

The American oil giant is helping prop up the beleaguered nation’s energy industry, positioning itself for post-Maduro prosperity.

- Peter Millard and Fabiola Zerpa

Donald Trump may have slammed Venezuela with sanctions in an effort to change the regime of President Nicolás Maduro, but the country’s energy industry has an unlikely ally: Chevron Corp.

Despite the U.S. administration’s push to disrupt the financial resources available to Venezuela’s leadership, the second-biggest U.S. oil company is working to bolster one of the Maduro government’s chief economic pillars—its ability to produce crude oil. Chevron is helping tap four fields in the country while testing new injection technologies to maximize production in one, says a person familiar with the operations who asked not to be named because he wasn’t authorized to discuss the matter. Chevron is also helping pay for supplies, expenses, and even health care for workers at state-owned oil producer Petróleos de Venezuela SA (PDVSA) to keep the crude flowing, says that person.

Chevron’s actions are an attempt to play the long game in economically ravaged Venezuela. U.S. and European rivals have largely abandoned the country, but Chevron is betting on a future payoff if it stays put in a country with 303 billion barrels of proven crude reserves, or about 7 billion more than Saudi Arabia. If Maduro retains power, Chevron will keep its tenuous—but still profitable— foothold in Venezuela. If he’s forced out and U.S. sanctions end, the company could be first in line to gain from the country’s vast geologic riches.

“They will try to hang on for as long as they can,” says Francisco Monaldi, a lecturer in energy economics at Rice University’s Baker Institute for Public Policy. “I think they realize there’s going to be an oil opening different from Brazil, Mexico, or Venezuela in the past. They will have to open up the best fields” to international oil companies.