Chevron is "in discussions" with Venezuela about adding opportunities to invest in that country following the recent death of its controversial populist President Hugo Chavez, Chevron CEO John Watson said Tuesday.
But Watson told reporters following the company's annual security analyst meeting that the issues have been "commercial terms and considerations," although he did not immediately elaborate.
"We continue to have those discussions," he said, suggesting they pre-dated Chavez' death last week from an unspecified cancer. "I think there's a lot Chevron can bring to Venezuela -- jobs, investment and ultimately higher production."
But since Venezuela is now in a period of mourning, Watson said, "it's premature to say a lot about investment opportunities until we can get through the [upcoming election of a new president] and engage."
Chevron has existing stakes in several oil projects in petroleum-rich Venezuela. Among them are the Petroboscan field and the Petroindependente projects, both in the western part of the country; the Petropiar project that operates the Hamaca heavy oil field; and the Petroindependencia project that is working toward commercialization of Carabobo 3 area in the Orinoco Belt. The company also has a stake in offshore eastern Venezuela's Plataforma Deltana area, which includes the Loran field.
FRADE FIELD RESTART
In addition, Chevron is "working on regulatory issues" toward a restart of the Frade Field offshore Brazil, Watson said.
Chevron last year was forced to suspend operations at Frade, located in the Campos Basin, after a small oil spill there in 2011 of about 3,700 barrels.
"We've reached general agreement on how that will take place [and] we're working out the final elements of that," he said. "It's now just reaching agreement with all the regulators and legal bodies on the basis of which field will be starting up and how it will be operated."
Chevron has had a history in Venezuela for 80 years, "through different governments," Watson said. "It's Chevron's position to work cooperatively with whoever is in office [and] we expect to do that" with the new president.
The company, meanwhile, expects to add 30,000 b/d of oil equivalent to its US Permian Basin production by year-end, George Kirkland, executive vice president-upstream, said during the meeting; that is up from over 100,000 boe/d net currently. And by 2017, "we'll be almost at the 200,000 boe/d level."
Chevron is the basin's second-largest producer there with over 2 million acres under lease, and has about 20 rigs there and should be at 23 rigs by year-end, Kirkland said.
"We plan to further increase activity levels," to over 400 wells in 2013 from more than 300 last year, said Kirkland. "The Permian Basin will remain one of our key legacy assets."
The company has focused so much on that basin, where other operators are also seeing rapid production increases, due to "the success we're seeing there," he said. For example, the last four Delaware basin wells the company has drilled debuted at rates over 1,000 boe/d of resource -- considered by industry to be a good rate. Chevron has a 50%-100% stake in those wells.
Also, Watson said Chevron entered the Kitimat LNG project in Western Canada is "not only the size of the resource" of 50 Tcf of natural gas, but permitting." The company and Apache Corp each hold a 50% stake in the project, which is in its early stages, already had permits for the LNG gas exports and an associated pipeline.
The project is already in front-end design and engineering stage, said Watson, and "we think [it] has a good chance to move forward."
"We do have gas marketing to do," he said. "One thing our partner saw in us was our ability to market LNG," which will be "important to underpin that project," said Watson.
