Venezuela Signs Oil Agreements With Chevron After US Deal

**SPEAKER_1** (0:02)
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This is Bloomberg Businessweek Daily, reporting from the magazine that helps global leaders stay ahead, with insight on the people, companies, and trends shaping today's complex economy, plus global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily podcast with Carol Massar and Tim Stenovec. On Bloomberg Radio.

**Tim Stenovec** (0:32)
Bloomberg News Washington correspondent Tyler Kendall is in Venezuela, where she spoke earlier today with both the US Energy Secretary, as well as Mike Wirth, the CEO of Chevron. Tyler, welcome. What can you tell us about what energy companies are doing today in Venezuela?

**Tyler Kendall** (0:45)
Well, we actually just finished a signing ceremony that took place in the presidential palace where I am right now, where we saw a flurry of deals from the private sector that are boosting their investment to help drill more and increase the oil output in Venezuela. Because relatively speaking, we really haven't seen production ramp up in the wake of the ouster of Nicolas Maduro data analyzed by Bloomberg News showing that Venezuela right now is averaging about 1.1 million barrels per day. That is well below the height of production nearly three decades ago. That was around 3.5 million barrels. The backdrop here is that senior administration officials tell me this is really part of a bid to try to make the industry more comfortable in investing in Venezuela amid this relative hesitancy. And the backdrop includes that US government deal where the government is going to be taking this equity stake in a private company that has been granted a 100 year lease to develop merely 17 strategic oil fields. There are some questions here about the legal durability as well as the feasibility when it comes to scale. But as you're about to hear, the US energy secretary told me that they are expecting to ramp this up at full speed.

**Chris Wright** (1:55)
There's scale already in several of those fields. A number of them haven't seen any meaningful development yet. Some of them were at Russian partnerships or Chinese partnerships or frankly criminal partnerships. So this is to bring these fields into real commercial development. But the speed of things, I mean so far we have gone at Trump's speed in Venezuela.
Country production is up 25 percent, exports are up 50 percent. We think even from production today already elevated that could double by the end of this decade.

**Tyler Kendall** (2:31)
The US government will also be granted the right to purchase 20 percent of the production output from this joint venture at cost. So below market price, we're told that that will then be used to refill the strategic petroleum reserve, which is at record lows though. Tim, we heard, I asked the Energy Secretary directly about whether or not Venezuelan food would really go into the SPR, and he said instead this is going to be some sort of swap mechanism, but it is designed to help bolster those supplies since they are running pretty low.

**Lisa Mateo** (3:02)
And Tyler, you've had a busy day. You also spoke with Chevron CEO Mike Wirth. What exactly did he tell you? I know a lot of questions around what kind of protections has Chevron built into this investing deal.

**Tyler Kendall** (3:16)
Right, exactly. That is perhaps one of the biggest questions here. What exactly did they get either from the Venezuelan government or assurances from the US government when it comes to expanding investment here in Venezuela on the heels of what is the largest financial commitment that we've seen so far from a major oil company since the ouster of Nicolas Maduro. And I'll let him answer that question for me. Take a listen to what he told me earlier when I pressed him on exactly what this contract is going to look like.

**SPEAKER_6** (3:43)
As important as the commercial and fiscal terms were the legal terms and the protections for investors, which is an issue that we deal with in many, many countries around the world. And so we have provisions in there that are very strong relative to other contracts as it relates to resolving disputes, ensuring that the tax and royalty regime that we've agreed to and will invest under isn't changed on us.

**Tyler Kendall** (4:14)
We're told me that this development is expected to double Chevron's development here in Venezuela over the coming years. Lisa and Tim, he's currently right now inside the presidential palace, meeting with these other energy CEOs as well as the energy secretary and the interim president of Venezuela, Delcy Rodriguez.

**Tim Stenovec** (4:35)
I'm left with you.
I'm wondering what happens next. I mean, there's a lot of questions, not just about the durability of this deal, as you mentioned, how many years this continues to go on. But what's the next thing that you're watching out for to try to understand the full extent of American investment in this country?