Chevron Preparing To Leave Venezuela

Chevron Preparing To Leave Venezuela

Chevron is preparing to leave Venezuela in the event the U.S declines to extend a waiver allowing it to continue its operation in the country.

For the past year the company has updated some of its contracts with their partners in Venezuela adding a clause to allow them an early termination, according to sources close to the matter. Under the new terms, Chevron would incur no penalties for early termination and all payments would be prorated up to the date of notification.

The new provision comes at the U.S. continues to tighten the sanctions against Venezuela in a bid to oust President Nicolas Maduro. Chevron is the last American company producing oil in the country, the waiver is set to expire October 25th. 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.”

The U.S Government has decline to extend Chevron’s waiver, the decision would put and end to the oil major’s 100-year history in the country. The story between Chevron and Venezuela started in 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.

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.