March 23 (Reuters) – Chevron is seeing progress in Venezuela as its oil production in the OPEC country rises, but more work is needed to change key energy legislation and secure conditions for investment, CEO Mike Wirth said on Monday.
“There’s still things that need to happen to encourage investment at the scale that people would like to see,” Wirth said in remarks at the CERAWeek by S&P Global conference in Houston.
Venezuela’s oil industry is the subject of renewed interest after the U.S. earlier this year removed President Nicolas Maduro and called for billions of dollars of fresh investment to rebuild the sector after decades of stagnation. American officials, including Energy Secretary Chris Wright, have visited the South American country to help kickstart those efforts.
Wirth said access to international arbitration would be important and that fiscal terms recently approved by Venezuela’s National Assembly in a January oil law reform were relatively broad, requiring specific incentives.
“At one end of the range we have investments that look attractive, at another of the range you have investments that probably wouldn’t, so there’s discretion and some ambiguity or uncertainty that still exists in the law that I think you can tighten up,” Wirth said.
Through the reform, foreign companies in Venezuela gained autonomy for operating oilfields, selling the crude and cashing the proceeds. The South American country also allowed companies to outsource oil projects and introduced reduced royalties for certain projects at the oil ministry’s discretion.
When the sweeping reform was approved, Venezuelan lawmakers said separate legislation for regulating oil taxation by project type would be drafted and discussed. But the government-controlled congress has since then prioritized other reforms, including a mining law, delaying any additional oil legislation.
Many joint-venture partners of state company PDVSA have been pressing Washington and Caracas for additional changes that would grant access to international arbitration for contract dispute resolution, and specific taxation aimed at reducing royalties and income taxes for greenfield projects, according to sources involved in the talks.
Some companies operating in the country, particularly PDVSA’s largest partners, want the law to mirror licenses issued by the U.S. Treasury Department for Venezuela’s oil and gas sectors that require contracts to follow U.S. laws and include dispute resolution at international courts.
So far, however, President Delcy Rodriguez’s administration has shown reluctance to discuss another reform of the hydrocarbons law, the backbone of the country’s oil sector, according to the sources.
Chevron is PDVSA’s most important oil partner, currently producing some 250,000 barrels per day or a quarter of the country’s total crude output from four joint ventures.
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