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By Tyler Kendall, Ari Natter, and David Wethe
With private companies on the cusp of signing a series of deals that will put Venezuela on pace to rapidly expand its crude output, US Energy Secretary Chris Wright said that China won’t have any debt claims to the revenue from new production.
There are efforts underway to restructure Venezuela’s debt, Wright said in a Bloomberg Television interview in Caracas.
Wright, who is scheduled to meet with acting Venezuelan President Delcy Rodríguez during his visit to the country, is expected to announce more than a dozen agreements with energy companies on Wednesday. The largest is with Chevron Corp., which is significantly expanding its Venezuela operations with two giant oil fields in the Orinoco Belt. Deals have also already been signed with GE Vernova Inc. and Eni SpA, Wright said.
“Venezuela’s got a lot of historical debt,” Wright said in the interview. “These fields will be developed for the benefit of the Venezuelan people, for the benefit of Americans and for the benefit of global energy markets.”
Trump officials have cast the effort to enlist oil companies from the US and elsewhere to work in Venezuela as a way to limit the influence of Chinese and Russian companies in the region. Shell Plc, BP Plc and Spain’s Repsol SA and also are expected to sign deals, Rodríguez said earlier this week on Venezuelan state television.
Meanwhile, as Venezuela works with the US, the OPEC founder member is considering whether it should quit the oil cartel it helped create more than six decades ago.
Wright said he hasn’t had conversations with Venezuela’s officials on whether the South American nation should leave OPEC.
Strategic Petroleum Reserve
The US plans to use the oil to help rebuild the US’s dwindling emergency reserves, Wright said. Venezuelan oil is unlikely to be injected straight into the storage caverns, but will instead be used in swap operations, he said.
Watch: Venezuelan Oil Replenishing SPR a ‘Pure Fantasy’: Schork (Video)
While Wright didn’t provide details of how the mechanism would work, it’s possible the US would use Venezuelan oil in its exchange program. Unlike an SPR sale, in which the government sells crude for cash, an exchange would allow refiners and traders to borrow Venezuela oil and repay the government with US crude delivered to the reserve’s storage caverns.
“The notion that we are going to use Venezuelan oil to plug the SPR is pure fantasy,” Stephen Schork, principal and editor at The Schork Group, said in a Bloomberg TV interview. “Venezuelan oil is the highest viscous, heaviest, densest oil in the world. The SPR logistically can not handle that oil,” he said.
— With assistance from Lucia Kassai, Charles Gorrivan, Jonathan Ferro, and Lisa Abramowicz
(Updates with comments on the SPR in the final three paragraphs.)
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