Chevron has halted oil production and service contracts in Venezuela, transferring operational control to state-owned PDVSA, but will maintain its workforce and joint-venture stakes under a restrictive US license—marking a strategic retreat while preserving its foothold in the sanctioned country.
Key Developments
🛑 Contract Termination:
- Chevron ended production, service, and procurement agreements but retains 40% stakes in key ventures.
- PDVSA takes full operational control, including crude sales—risking new debt accumulation to Chevron.
🇺🇸 US Sanctions Tighten: - Trump revoked Chevron’s broad operating license in March; a narrower permit now allows only asset preservation.
- No drilling, exports, or expansion permitted—blocking revenue to Maduro’s government.
Why Chevron Stays (Partly)
📉 Asset Protection: Retains stakes in Petropiar, Petroboscan ventures (previously producing 290K bpd).
đź‘Ą Staff Retention: Keeps direct employees but may cut bonuses for joint-venture workers.
🔄 Future Flexibility: Holds position for potential post-sanctions reactivation.
Impact on Venezuela
⚡ Production Blow: Loses Chevron’s technical expertise and US market access.
💰 Cash Crunch: PDVSA must now sell crude alone—likely at discounts to Asian buyers.
🛢️ Output Struggles: Venezuela’s production (~800K bpd) remains far below pre-sanctions levels.
What’s Next?
- Debt Risks: PDVSA may fall behind on payments to Chevron for shared output.
- Sanctions Standoff: Trump demands electoral reforms; Maduro calls sanctions “economic war”.
- Industry Watch: Will European firms (Eni, Repsol) face similar US pressure?