Over the past year, the San Ramon,
California-based company updated some of its contracts with partners in the
South American country to allow for the possibility of early termination,
according to people with knowledge of the matter. Under the new terms, Chevron
would incur no penalties for early termination and all payments due would be
prorated up to the date of notification.
The new provisions come as the U.S.
continues tightening sanctions against Venezuela in a bid to oust President Nicolas Maduro. Chevron, the
last American company producing oil in the country, faces the October 25
expiration of a special waiver allowing it do business there. Some of Chevron’s
long-term contracts were updated at the end of 2018, while other agreements
were modified after the company obtained the sanctions waiver in July.
Chevron spokesman, Ray Fohr, said the company is hopeful that its license to operate
will be renewed in October. “We are a positive presence
in the country,” he said by email. “Our focus is
maintaining the safety of the operations and supporting the more than 8,000
people who work with us as well as their families.”
If the U.S. government declines to
extend Chevron’s waiver, the decision would put an end to the oil major’s
100-year history in the country, a story that started in the 1920s and survived
a number of military coups and civil unrest. While Exxon Mobil Corp., Royal Dutch
Shell Plc and ConocoPhillips pulled out of Venezuela, Chevron reaffirmed its
commitment to the country.
The company has applied its expertise
in extracting heavy oil from California oil fields to its projects in South
America and over the years has expanded its footprint by building a facility to
pre-process sludgy Venezuelan oil into refinery-ready grades.
Chevron warned in August that
developments in the crisis-torn South American nation could hurt its earnings.
“Future events related to the
company’s activities in Venezuela may result in significant impacts on the
company’s results of operation in future periods,” Chevron said in a filing with the U.S.
Securities and Exchange Commission. The language had evolved from the company’s
previous quarterly filing, when it said developments in the country could lead
to “increased business disruption and volatility in the associated financial
results.”
Chevron has about 330 direct employees
in Venezuela, according to a person familiar with the company affairs.
Venezuela accounted for only 1% of the company’s global crude oil output in
2018, or 42,000 bpd. The Petroboscan and Petropiar ventures are currently
active, while the Petroindependencia and Petroindependiente projects are shut
amid lack of parts and a humanitarian crisis in Venezuela. (World Oil)
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