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Chevron 'hopeful' of US approval to continue operating in Venezuela

HOUSTON/WASHINGTON: Chevron Corp , the last US oil company still operating in Venezuela, is "hopeful" of being able

Jul 25 2019

HOUSTON/WASHINGTON: Chevron Corp , the last US oil company still operating in Venezuela, is "hopeful" of being able to remain in the Latin American country after early Saturday, a spokesman said on Thursday, given the billions of dollars in investments it has at stake.

A six-month US Treasury Department license to do business in the country is about to expire and the Trump administration said a decision would be made soon on the renewal.

In January the Trump administration imposed sanctions on PDVSA, Venezuela's state-run oil company, intended to starve the country of oil revenue and force out President Nicolas Maduro, whose reelection the US considers illegitimate.

"We are still waiting on a final decision," said Chevron spokesman Raymond Fohr, adding the second-largest US oil company "remains hopeful that General License 8 will be renewed." A January license gave it six months to wind down operations with PDVSA (Petroleos de Venezuela).

There will be a decision before the 12:01 a.m. Eastern Saturday renewal deadline, a US administration official said on Thursday.

The Trump administration in January issued licenses to five companies. The other four are Halliburton Co, Schlumberger, GE's Baker Hughes and Weatherford International; all have largely halted operations.

An exit would put at risk Chevron's several billion dollars in investments, about 300 jobs and a nearly 100-year presence in the country. Investments in the joint ventures totaled $2.68 billion at the end of December, according to its latest annual report.

A forced retreat from Venezuela could trigger impairment charges on its investments, Jennifer Rowland, analyst with Edward Jones, said.

"I would expect them to take a write-down if they don't get an extension," she said, adding that it would not be significant.

Chevron reported a loss of $51 million in the first quarter from its equity affiliates, including the Venezuelan joint ventures, compared with profit of $159 million in the same period a year earlier.

Its stakes in four joint venture operations with PDVSA produced about 42,000 barrels per day of oil and natural gas. Until sanctions were levied, the company received dividends from the joint ventures in payment for its production. Its contracts with the joint ventures run until at least 2026.

Copyright Reuters, 2019