Oil from the US-Venezuela agreement may enter US reserves in November; Chevron plans to invest $7 billion in Venezuela to expand production; its stock price hits a new high.

Oil cooperation between the United States and Venezuela is accelerating. Energy giants such as Chevron and ENI signed several production expansion agreements in Caracas on Wednesday, pledging massive investments to boost oil production in the OPEC member country. On the same day, the White House stated that crude oil under the agreements would enter U.S. reserves as early as November.

Chevron announced a $7 billion investment over the next five years in Venezuela through joint ventures, with production expected to reach approximately 600,000 barrels per day by 2031, more than doubling current levels. Chevron stated that the total extraction cost for the project is projected to be less than $20 per barrel, while Brent crude was trading at around $95 per barrel on Wednesday.

Chevron shares closed up 0.35% on Wednesday at $211.78, surpassing the March high and setting a new all-time high.

White House spokeswoman Anna Kelly said in an interview that the crude oil obtained through the agreement with Venezuela could arrive in the U.S. reserve system in November.

According to CCTV News, on September 2, Venezuelan Acting President Rodriguez met with U.S. Energy Secretary Wright. Following the meeting, the two countries formally signed several cooperation agreements.

US President Trump recently announced on social media that the United States has reached an agreement with Venezuela, gaining "majority control" over Venezuela's proven oil reserves of more than 65 billion barrels.

Venezuelan acting president Delcy Rodriguez stated that the oil cooperation agreement reached with the United States will last for 25 years, with the goal of increasing crude oil production to 1.5 million barrels per day and maintaining Venezuela's autonomy over its natural resources.

Venezuela's current daily production is around 1.25 million barrels, far below its peak of 3 million barrels per day in the late 1990s.

Chevron has committed over $7 billion to double its production within five years.

Chevron represents the largest deal in this round. The company plans to invest $7 billion over the next five years through joint ventures to acquire development rights to the Carabobo 1 and Carabobo-2-South-A oil fields, both of which are adjacent to Petroindependencia, a joint venture in which Chevron holds a 49% stake.

The goal is to increase Venezuela's oil production to 600,000 barrels per day from current levels within the next five years, doubling the current capacity.

CEO Mike Wirth stated that the company is establishing a "significant strategic position" in Venezuela, where the two oil fields "contain billions of barrels of equivalent resources."

Wirth stated that some of the Venezuelan reserves that the company had impaired years ago will be reinstated on its books, and that a "significant protection mechanism" has been set up in the agreement.

Chevron typically ships Venezuelan crude oil to refineries along the U.S. Gulf Coast for processing; with total extraction costs below $20 per barrel and Brent crude around $95 per barrel, the project offers considerable profit margins.

The signing ceremony was held at the Presidential Palace in Miraflores, Caracas. Chevron is one of the few major international oil companies that has remained committed to the Venezuelan market after former President Hugo Chávez nationalized its assets in 2007, and this agreement further solidifies its strategic position in the country.

ENI enters the Orinoco oilfield, focusing on actual production.

In addition to Chevron, Italy's Eni has secured a 25-year exclusive operating contract for the Junin 5 block and will begin drilling on Thursday. CEO Claudio Descalzi stated that the block contains over 35 trillion cubic feet of natural gas and has "enormous potential," and plans to submit a development plan for the block in October.

At the ceremony, ENI CEO Claudio Descalzi stated bluntly, "What we need is not just signed documents, but actual barrel production."

Most of the aforementioned agreements are not the result of isolated negotiations, but rather part of the process of migrating dozens of energy contracts to new terms under the framework of Venezuela’s large-scale oil reform approved in January of this year, negotiations of which have been underway for several months.

Also participating in the signing were power company GE Vernova, energy company Primavera, and Denver-based oilfield services company Aspect.

GE Vernova has formed a strategic alliance with PDVSA and signed an agreement with the national power company Corpoelc to repair and strengthen Venezuela's aging and dilapidated power and energy infrastructure. Venezuela's fossil fuel industry has suffered for years from mismanagement, corruption, and sanctions, with its weak power and infrastructure infrastructure being a persistent bottleneck to production growth.

Washington's role: NABEP equity negotiations underway

The U.S. government's role in this round of transactions is expanding from policymaker to potential direct stakeholder. Earlier this week, the U.S. began negotiations to acquire a 35% stake in NABEP.

NABEP is a privately held company that holds century-old concessions for 17 oil fields in Venezuela; if the deal goes through, Washington will indirectly become involved in the development and profit distribution of these core assets.

At the signing ceremony in Caracas, U.S. Energy Secretary Wright called the deal worth "tens of billions of dollars," calling it "a transformation for Venezuela," and emphasized that "we (the United States) are extremely interested in expanding energy production in the Americas, our neighbor."

Venezuelan acting president Delcy Rodríguez said these "historic" moves will soon bring economic growth and thanked the Trump administration for pushing for a "win-win" agreement.

Wirth also noted that the new Venezuelan supply will enter the market "gradually," and the disruption to shipping in the Strait of Hormuz is not a "quick fix," adding that "these investments will take years." Even if Chevron's expansion plan is successfully implemented, Venezuelan production will still be far below the nearly 3.5 million barrels per day level of the late 1990s.

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