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Chevron (CVX), PDVSA Seek a 15-Year Deal to Boost Oil Output
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Chevron Corporation (CVX - Free Report) , a U.S. oil giant, and a unit of Venezuela's state oil company PDVSA are actively seeking a 15-year extension for two of their joint ventures (JVs). This strategic initiative was revealed by deputy minister Erick Perez during a recent conference, shedding light on the potential for expanded operations and increased crude exports between the two entities.
Expanding Operations Under a Special U.S. License
Since late last year, Chevron and PDVSA have navigated their operations under a special U.S. license. This unique arrangement has allowed Venezuela to resume crude exports to its largest market, the United States. However, achieving pre-sanction production level demands further investment, setting the stage for the JVs’ extended collaboration.
Project Overview: Petroboscan and Petroindependiente
Petroboscan: Sustaining Production of Heavy Crude
Petroboscan, the largest of the two joint projects, currently produces approximately 65,000 barrels per day (bpd) of heavy crude. To ensure sustained growth and efficiency, the project requires a substantial investment of $1.28 billion and operational expenses of $3.35 billion over the proposed 15-year extension period.
Petroindependiente: Nurturing Growth and Innovation
The second project, Petroindependiente, is aimed at continued development. With an investment requirement of $10.7 million and operational expenses amounting to $205 million, this venture is poised to contribute to the overall resilience and prosperity of the collaboration.
Regulatory Hurdles and National Assembly's Role
Venezuela's National Assembly, currently dominated by the government's party following an election without international observation, stands as a crucial gatekeeper. The fate of the JVs’ extension request rests in the hands of the assembly, which is expected to thoroughly deliberate before granting the green signal. This political landscape adds a layer of complexity to the business proceedings.
OPEC Quota Dynamics
Perez also addressed Venezuela's current standing within the OPEC framework. With the nation's oil output lagging below its 1.9 million-bpd OPEC quota due to sanctions, Venezuela seeks continued exemption from planned OPEC+ output cuts. Perez highlighted the imperative need to surpass the sanctions-induced limitations, emphasizing a commitment to ramping up production to meet global demands.
Offshore Gas Project Revival: Plataforma Deltana
To diversify its energy portfolio, Venezuela is actively working to revive the dormant offshore gas project, Plataforma Deltana. Situated near waters reclaimed by Guyana, this ambitious project signifies the nation's commitment to exploring new frontiers in the energy sector. However, specific details about the project's revival remain undisclosed at this point.
Conclusion
Chevron and PDVSA's pursuit of a 15-year extension for their JVs marks a significant stride toward fostering sustained growth and collaboration. The intricate interplay of economic, political and regulatory factors adds a layer of complexity to these initiatives. As the global energy landscape continues to evolve, these JVs serve as a testament to the resilience and adaptability of major players like Chevron and PDVSA.
The Williams Companies is valued at $42.12 billion. The company currently pays a dividend of $1.79 per share, or 5.17%, on an annual basis.
WMB, the U.S.-based energy infrastructure company, operates through Transmission & Gulf of Mexico, Northeast G&P, West and Gas & NGL Marketing Services segments.
MUSA is worth $7.68 billion. In the past year, its shares have risen 24.6%.
MUSA is involved in the marketing of retail motor fuel products and convenience merchandise. It operates retail gasoline stores principally in the Southeast, Southwest and Midwest United States.
Liberty Energy is valued at $3.1 billion. LBRT currently pays a dividend of 28 cents per share, or 1.52%, on an annual basis.
LBRT is a leading provider of hydraulic fracturing and other auxiliary services to the North American onshore exploration and production companies.
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Chevron (CVX), PDVSA Seek a 15-Year Deal to Boost Oil Output
Chevron Corporation (CVX - Free Report) , a U.S. oil giant, and a unit of Venezuela's state oil company PDVSA are actively seeking a 15-year extension for two of their joint ventures (JVs). This strategic initiative was revealed by deputy minister Erick Perez during a recent conference, shedding light on the potential for expanded operations and increased crude exports between the two entities.
Expanding Operations Under a Special U.S. License
Since late last year, Chevron and PDVSA have navigated their operations under a special U.S. license. This unique arrangement has allowed Venezuela to resume crude exports to its largest market, the United States. However, achieving pre-sanction production level demands further investment, setting the stage for the JVs’ extended collaboration.
Project Overview: Petroboscan and Petroindependiente
Petroboscan: Sustaining Production of Heavy Crude
Petroboscan, the largest of the two joint projects, currently produces approximately 65,000 barrels per day (bpd) of heavy crude. To ensure sustained growth and efficiency, the project requires a substantial investment of $1.28 billion and operational expenses of $3.35 billion over the proposed 15-year extension period.
Petroindependiente: Nurturing Growth and Innovation
The second project, Petroindependiente, is aimed at continued development. With an investment requirement of $10.7 million and operational expenses amounting to $205 million, this venture is poised to contribute to the overall resilience and prosperity of the collaboration.
Regulatory Hurdles and National Assembly's Role
Venezuela's National Assembly, currently dominated by the government's party following an election without international observation, stands as a crucial gatekeeper. The fate of the JVs’ extension request rests in the hands of the assembly, which is expected to thoroughly deliberate before granting the green signal. This political landscape adds a layer of complexity to the business proceedings.
OPEC Quota Dynamics
Perez also addressed Venezuela's current standing within the OPEC framework. With the nation's oil output lagging below its 1.9 million-bpd OPEC quota due to sanctions, Venezuela seeks continued exemption from planned OPEC+ output cuts. Perez highlighted the imperative need to surpass the sanctions-induced limitations, emphasizing a commitment to ramping up production to meet global demands.
Offshore Gas Project Revival: Plataforma Deltana
To diversify its energy portfolio, Venezuela is actively working to revive the dormant offshore gas project, Plataforma Deltana. Situated near waters reclaimed by Guyana, this ambitious project signifies the nation's commitment to exploring new frontiers in the energy sector. However, specific details about the project's revival remain undisclosed at this point.
Conclusion
Chevron and PDVSA's pursuit of a 15-year extension for their JVs marks a significant stride toward fostering sustained growth and collaboration. The intricate interplay of economic, political and regulatory factors adds a layer of complexity to these initiatives. As the global energy landscape continues to evolve, these JVs serve as a testament to the resilience and adaptability of major players like Chevron and PDVSA.
Zacks Rank and Key Picks
Currently, CVX carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some better-ranked stocks like The Williams Companies (WMB - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Murphy USA Inc. (MUSA - Free Report) and Liberty Energy Inc. (LBRT - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Williams Companies is valued at $42.12 billion. The company currently pays a dividend of $1.79 per share, or 5.17%, on an annual basis.
WMB, the U.S.-based energy infrastructure company, operates through Transmission & Gulf of Mexico, Northeast G&P, West and Gas & NGL Marketing Services segments.
MUSA is worth $7.68 billion. In the past year, its shares have risen 24.6%.
MUSA is involved in the marketing of retail motor fuel products and convenience merchandise. It operates retail gasoline stores principally in the Southeast, Southwest and Midwest United States.
Liberty Energy is valued at $3.1 billion. LBRT currently pays a dividend of 28 cents per share, or 1.52%, on an annual basis.
LBRT is a leading provider of hydraulic fracturing and other auxiliary services to the North American onshore exploration and production companies.