(BOE Report) – U.S. Energy Secretary Chris Wright said on Tuesday after landing in Venezuela that deals that oil companies from the U.S. and other countries sign tomorrow in Caracas will lead to a more than doubling of crude production in the next few years.
Wright is on a one-day trip to the founding OPEC member, his second since U.S. forces seized Venezuela’s leader Nicolas Maduro in January.
Venezuelan oil production peaked above 3 million barrels per day in the late 1990s but plummeted after that on a lack of investment, mismanagement and U.S. sanctions. In recent months it has been around 1.1 million to 1.2 million bpd, rising slightly since Maduro was captured.
Wright said U.S. gasoline prices should fall in coming weeks due to steps the Trump administration has taken to ease regulations on refiners.
“The investment in these deals will massively grow available oil production, which will give downward pressure on oil prices, but the biggest kink right now in gasoline and diesel prices is refining capacity,” Wright, who traveled with officials from the U.S. Departments of Treasury and State, told reporters after landing.
Chevron, the largest American oil producer in Venezuela, along with Italy’s Eni, India’s ONGC, Colombia’s GeoPark and the U.S.’ GE Vernova are on track to sign agreements on energy projects in the country this week.
Wright’s meetings in Venezuela come days after President Donald Trump unveiled a separate deal for the U.S. to gain long-term access to a fifth of Venezuela’s proven oil reserves, which are among the largest in the world.
Private, U.S.-backed oil firm North American Blue Energy Partners, or NABEP, would receive a 100-year lease for 17 oilfields in Venezuela, holding some 65 billion barrels of oil reserves, under the arrangement.
The deal with NABEP, controlled by Venezuelan businessman Alejandro Betancourt, was arranged by Washington and Caracas without a competitive process.
That and the fact that Betancourt has been investigated by U.S. and European authorities, but never charged over past dealings in Venezuela, have raised flags among some oil companies weighing investments in the country, Reuters reported on Monday. He has previously denied allegations against him. NABEP said Betancourt has been in the Venezuelan oil industry for more than 15 years with a track record of success.
OILFIELDS FORMERLY LED BY RUSSIA, CHINA
Betancourt is “not a bad actor,” said a U.S. official who spoke on the condition of anonymity as they were not authorized to speak publicly, on the plane to Caracas.
The official added that many of the oilfields in the deal with NABEP were until recently controlled by China and Russia. The official added that Betancourt brought oil rigs to Venezuela from Texas, which will provide jobs in the U.S. and in Venezuela.
The U.S. official downplayed the idea that China would be upset by Washington’s moving in on Venezuela’s resources.
“Obviously we maintain a very robust bilateral relationship with China and I don’t think that… this is anything they weren’t expecting,” the U.S. official said.
Wright said 17 million barrels of oil transited the Strait of Hormuz on Monday, adding that it marked the highest level of crude oil to pass through the waterway since the U.S.-Israeli war on Iran had reduced flows.
(Reporting by Timothy Gardner; Editing by Christian Schmollinger and Thomas Derpinghaus)
