(Bloomberg)– Chevron Corp. could boost its cash flow by as much as $700 million a year from increased oil production in Venezuela, as the Trump administration seeks to control crude supplies to the South American country, according to an analyst.
Chevron, the only major U.S. oil company currently operating in Venezuela, has a “differentiated opportunity among its peers to increase production,” Jason Gabelman, an analyst at TD Cowen, wrote in a note Friday. His efforts could bring in $400 million to $700 million a year, representing about 1 percent to 2 percent of the company’s operating cash flow, he said.
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U.S. oil executives, including representatives from Chevron, are set to meet at the White House on Friday as President Donald Trump lays out his vision for rebuilding Venezuela’s oil industry, in shambles after decades of corruption and mismanagement. Home to the world’s largest oil reserves, the country represents an attractive long-term opportunity for major oil companies, but companies are hesitant to invest in the short term due to uncertainty surrounding security and the rule of law.
Chevron will likely increase production at its existing assets rather than commit large amounts of new capital to the country, according to the memo.
“We suspect that Chevron will be reluctant to invest significant additional capital in Venezuela until there is a stable government and tax regime,” Gabelman wrote.
Chevron’s joint ventures currently produce about 240,000 barrels per day from Venezuela, according to TD Cowen. The company shares this production approximately equally with the state-owned Petróleos de Venezuela SA.
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