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The administration of Trump ordered Chevron to stop oil pumping in Venezuela, dealing with additional shock for the U.S. oil giant company’s pro-long relationship with the crisis-ravaged country of OPEC. According to the instruction, Chevron needs to unwind its working in Venezuela by 1st December. It’s part of the effort of the President to pressurize the administration of Nicolas Maduro, the Venezuelan President, to starving it of cash.
The Trump administration has ordered Chevron to halt oil production in Venezuela, dealing another blow to the American oil giant’s century-long relationship with the crisis-ravaged OPEC nation. https://t.co/7D6kBuzYPs
The last remaining oil producer company of the United States in Venezuela, Chevron, formerly approved licenses by the U.S. Treasury Department to keep production actions alive with PDVSA, the national oil company. Previously, Donald Trump sanctioned the company. The directive will have a partial impact on the finances of Chevron; however, it deals a delay to a firm that has to consume many years sinking resources into Venezuela. Moreover, it will only speed up the historical downfall of the oil industry of Venezuela.
Regardless of more oil resources than any other country on the earth, the production of Venezuela collapsed due to the extensive power outages mishandling, a human-made crisis and hard sanctions imposed by the American President. Ray Fohr, the spokesperson of Chevron, stated that they remain dedicated to the integrity of their mutual venture assets, the betterment, and the safety of their workforces and their families as well as the humanitarian and social programs of the company during these challenging periods.
Chevron Join Venezuela date to 1921
The administration of Trump is not pressurizing Chevron to leave Venezuela instantly. As part of the announcement of Tuesday, the United States Treasury Department renewed the license that gives the firm permission to sustain an additional presence in the country. Chevron stated that it would allow them to take on limited maintenance of essential processes in the country. Chevron will continue to obey applicable regulations and laws concerning the activities that it sanctioned to undertake in Venezuela, according to Fohr.s
Along with Chevron, wind down orders of Trump administration also applies to four other oil service providers, such as Schlumberger (SLB), Weatherford International (WFTLF), Halliburton (HAL) and Baker Hughes (BKR). A senior official of Trump administration stated that the U.S. continues to increase its maximum pressure campaign against the illegal Maduro management. The act will more deprive access to economic lifelines that Maduro depends on to continue his oppressive hold over Venezuela.
In 1921, Chevron started its oil production activities in Venezuela, employs around eight thousand workers in the country, along with its mutual venture partners. The oil firm has five offshore and onshore production oil projects there. Fohr said, their heritage in Venezuela dates back to the 1920s, and since then, they felt proud to be a part of local societies, contributing to their social and economic development. The corporation won’t permit to export or produce oil from Venezuela under the administrative order.
Chevron produced only around thirty-five thousand barrels of oil in Venezuela a day in 2019, below two percent of total oil production of Chevron, around 1.9 million barrels a day. Energy analyst at Raymond James, Paul Molchanov, says that Venezuela is an unusable addition of the asset base of Chevron for several years because of their crisis.
Chevron also cut production like all other oil companies
Recently, along with other oil companies, Chevron reduced its spending and oil production across the world to fight the worldwide historic prices crash. During the novel coronavirus pandemic and it’s after coming lockdowns almost in every big country, the oil demand just falls badly, causing an epic oil supply flood, due to which the United States oil prices turn negative this week for the first time in history. Along with the other four oil companies, Chevron will possibly request a license renewal after 1st December that will allow them to keep their partial presence in Venezuela.
U.S. oil prices have crashed below $0 a barrel. This is not a problem. We should not try to prop up oil prices. We should not bail out oil companies. We should accelerate our shift to solar, wind, and other non-fossil fuels.
For the last few years, the United States companies have been escaping from Venezuela as the nation falls away into chaos, both economic and political. ConocoPhillips (COP) and ExxonMobil (XOM) left Venezuela over ten years ago after then Hugo Chavez, the President of the country nationalized foreign-run oilfields. In 2015, Pepsi wrote off its business and took a loss of $1.4 billion. Whereas, Colgate, Bridgestone, Kimberly-Clark, and Mondelez also closed their operations in Venezuela.
