Commentary: Chevron just exposed the gap between Venezuela rhetoric and reality

REFORMS HELPED GREASE INVESTMENTS

Reforms to fiscal and legal terms passed in Venezuela earlier this year helped grease these new investments. But it is important to recognise that these are global oil majors building off existing positions and in a measured way, raising output by perhaps 700,000 barrels a day in aggregate over the course of four to five years.

This offers a vote of confidence for Trump’s designs on reinvigorating Venezuela as a large oil producer in America’s backyard. At the same time, it highlights how expensive and difficult it will be to go beyond the initial step-out and brownfield projects to raise Venezuelan production toward three million barrels a day and beyond, involving greenfield development of complex heavy-grade oil deposits.

The US venture with NABEP involves partnering not with a well-known international oil major but instead the controversial figure of Alejandro Betancourt, whose companies has faced investigations in several jurisdictions over allegations of corruption, money laundering and tax fraud, though he has denied wrongdoing and has faced no formal charges.

The deal’s opacity and overtly neocolonial framing, along with it being signed with an acting government in Caracas heavily tied to the ousted former regime, raise huge questions over whether it can last the decades needed to justify the colossal investment required to develop the touted billions of barrels of reserves.

While the White House envisages Betancourt being able to “raise private American capital” to do this, the more methodical approach of the likes of Chevron offers an alternative model. Indeed, evidence of the latter’s progress over several years may be the necessary proof of concept needed to attract the capital needed for any eventual Venezuelan oil boom.