Venezuela Warns Foreign Oil Companies: Increase Production or Leave the Country

RIO DE JANEIRO, BRAZIL – Venezuela has warned foreign oil companies like Chevron and Repsol that their licenses are at risk unless they help the OPEC member country reverse the historic decline in production, according to people familiar with the subject.

State-owned Petroleos de Venezuela (PDVSA) and the Ministry of Petroleum in Caracas last month wrote to all 19 joint venture partners whose contracts expire in 2026 to inquire about their intentions, according to a letter seen by Bloomberg. Under the existing contracts, companies can apply for 15-year license renewals. Oil companies had until January 15th to react to the letter.

Venezuela will seek new partners unless existing ones mobilize and help revive the collapsing oil industry after years of poor management and sanctions by the United States, anonymous sources said.

Although sanctions effectively stopped Chevron from producing oil in Venezuela since April, the U.S. oil giant was authorized to conduct transactions considered essential to preserving its assets. Chevron has long argued that the U.S. benefits from having a local producer in a country that holds the world’s largest oil reserves. Meanwhile, U.S. President Joe Biden has yet to signal his position on sanctions.

Spokesmen for the Ministry of Petroleum, Chevron and Repsol failed to reply to requests for comments sent by email. PDVSA did not want to comment.

PDVSA seeks to revisit the joint venture agreements and bring in new partners before the current licenses expire, sources said. Most projects produce little or nothing, as foreign companies are afraid of clashing with sanctions.

The new attempt to boost production in Venezuela’s oil industry comes when Nicolás Maduro’s regime, which so far has withstood U.S. efforts to bring him down, is promoting an “anti-blocking law” to attract foreign investment and open the economy to private enterprise.

PDVSA is considering a broad reorganization that could include ending its decade-long policy of majority participation in joint ventures, sources said last April. This would mark a turnaround in the nationalization initiative of former President Hugo Chávez, who confiscated assets of foreign companies such as Exxon Mobil and ConocoPhillips, which led oil companies to leave the country.

Venezuela’s oil exports fell to a seven-decade record low last year. The OPEC member produced 410,000 barrels a day in December, down more than 40% compared to the year before, according to a Bloomberg survey.

On Tuesday, January 19th, in a parting blow by the Trump government, the U.S. State Department announced measures against individuals and organizations accused of helping Venezuela escape oil sanctions.

Source: Bloomberg

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