U.S. Interior Secretary Doug Burgum said in an interview with Fox News on Monday that they aim to raise Venezuela’s oil production to 1.5 million barrels a day in the short term. Burgum said U.S. companies would play a central role in increasing output.
Describing Venezuela as a strategic energy partner for the United States, Burgum said the country has extensive oil reserves. He argued that Venezuela’s geographic location shields it from disruptions to energy flows through the Strait of Hormuz caused by conflicts in the Middle East.
Increasing production in Venezuela could limit the impact of global energy supply disruptions linked to conflicts in the Middle East and support U.S. energy security.
Scope of the Washington-Caracas agreement
The agreement between Washington and Caracas covers 17 strategic oil fields. Venezuelan authorities said the plan aims to attract more than $100 billion in investment to the country’s oil sector.
Under the cooperation framework, U.S. companies are expected to gain expanded access to Venezuela’s oil resources, while the country is expected to transport more of its crude oil to international markets. The U.S. administration also links the move to efforts to revive Venezuela’s oil sector after years of low investment and declining production.
Chevron and Eni’s plans for Venezuela
Chevron plans to invest more than $7 billion in Venezuela over the next five years. The company aims to increase production from its operations in the country to approximately 600,000 barrels a day.
Italian energy company Eni signed an agreement with Venezuela to develop the Junin 5 oil field in the Orinoco Belt.
Price target for the Strategic Petroleum Reserve
Burgum said reviving Venezuela’s oil sector would supply more crude oil to international markets and could help the United States refill its Strategic Petroleum Reserve at lower prices.
The U.S. administration plans to replenish the reserve at prices of $30 or $40 per barrel.
