Venezuela's state-run oil company, PDVSA, has crafted three operational strategies to continue its production and export activities at its largest joint venture with Chevron once the American major's operational license expires next month.
According to Reuters, the administration of former U.S. President Donald Trump recently set forth orders for Chevron to wind down all oil operations and exports from Venezuela under a license initially granted in 2022, giving the company just 30 days to comply. This puts the onus on PDVSA to find solutions to maintain its production levels and avoid operational halts.
At the forefront of these operations is the Petropiar project located at the expansive Orinoco Belt, where PDVSA is the largest stakeholder. Following the expiration of Chevron's license, PDVSA anticipates producing between 105,000 and 138,000 barrels per day (bpd) of Hamaca heavy crude, aligning with its recent output levels.
Key to PDVSA's strategy is the decision to funnel a portion of the crude output to domestic refineries along with various byproducts, including vacuum gasoil. This gasoil is significant as it allows PDVSA to produce low-octane gasoline for distribution within Venezuela. A source close to the company stated, "PDVSA’s main goal with the changes is to maintain Petropiar’s output levels and avoid the need to halt the upgrader or shut any of the joint ventures’ oilfields," emphasizing the need for continual flow from the assets.
While the specifics of the scenarios PDVSA outlined remain internal and closely guarded, the intent seems clear: to continue operations without interruption, even with the U.S. sanctions looming over their joint partnerships with Chevron.
To effectively manage potential shortages of diluents—which are necessary for sustaining operations at Petropiar—PDVSA plans to recycle greater amounts of imported naphtha and will provide additional diluents from its largest refining complex, located at Paraguana. This adaptability is expected to play a pivotal role as the company seeks to navigate through the imposed restrictions.
Interestingly, the document reviewed by Reuters indicates a reduction of tanker movements currently facilitating Chevron's oil transport from domestic ports, which were previously used for exports. This limitation may affect how PDVSA manages its crude movements both domestically and internationally as they pivot to new strategies.
Some units of Petropiar's crude upgrader are also set to be taken offline to handle different feedstocks besides crude oil—a strategic adjustment reminiscent of the actions taken by PDVSA during earlier restrictions imposed by the Trump administration.
The situation at PDVSA conjures up memories of previous strategies implemented under changing political climates. With sanctions and restrictions becoming common realities for the oil industry, PDVSA's ability to adjust will likely have long-standing impacts on Venezuela's oil exports heading toward other markets outside the U.S. Despite this tumultuous geopolitical atmosphere, PDVSA is clearly committed to finding pathways to maintain production and exports, demonstrating resilience amid adversity.
Although both PDVSA and Chevron have so far declined to comment on these developments, the urgency for PDVSA to adapt to the new operational environment cannot be understated. With the deadline for Chevron's operational shift looming, the next steps taken by PDVSA will be closely monitored by industry insiders and regulators alike, eager to see whether the Venezuelan state oil company can navigate these turbulent waters and maintain its position as one of the notable players within the global oil market.
