Risk & Compliance

Chevron Ordered to ‘Wind Down’ Venezuela Operations

The move by the Trump administration comes as crude prices plummet.
Lauren MuskettApril 22, 2020

Chevron has been ordered by the Trump administration to wind down its business operations in Venezuela by December 1 as the U.S. seeks to ramp up pressure on socialist President Nicolas Maduro.

Chevron was the last major U.S. oil company operating in Venezuela. It has been operating under a special license that exempted it from sanctions on the country’s oil sector, but it was set to expire Wednesday.

Chevron is also barred from drilling or exporting oil in the meantime. U.S. crude oil futures fell into negative territory for the first time in history on Monday.

A Better Way to Do Ecommerce

A Better Way to Do Ecommerce

Learn how Precision Medical leveraged OneWorld to cut the cost of billing in half and added $2.5M in annual revenue.

The order, by the U.S. Treasury Department, also covers oilfield service firms Baker Hughes, Halliburton, Schlumberger, and Weatherford International.

“Chevron will continue to comply with applicable laws and regulations in relation to the activities that it is authorized to undertake in Venezuela,” a Chevron spokesperson said. “We remain committed to the integrity of our joint venture assets, the safety and wellbeing of our employees and their families, and the company’s social and humanitarian programs during these challenging times.”

Chevron has been operating in Venezuela since 1921 and employees about 8,000 people in the country. It holds stakes in four oil and gas joint ventures with Venezuelan state-run oil company PDVSA, however last month it canceled service contracts and procurement processes at two of the joint ventures.

Chevron has argued that if it departs the market, Russian and Chinese firms will fill the void in the country, which sits atop the largest oil reserves in the world.

“Venezuela has been a useless appendage of Chevron’s asset base for many years because of the crisis there,” Raymond James analyst Paul Molchanov said.

Chevron produced about 35,000 barrels of oil in Venezuela per day in 2019, a fraction of its total global oil production. It said it will still be allowed to conduct “limited maintenance” of essential operations” in the country.