Chevron expands Venezuela presence with $7 billion plan to double output in five years

HOUSTON, Sept 2 (Reuters) - Chevron will invest more than $7 billion through its Venezuela joint ventures to double oil production to about 600,000 barrels per day over the next five years in the South American country, ‌the U.S. oil major said on Wednesday.

Under new agreements, Chevron's Petroindependencia joint venture will expand to include two adjacent areas in the ‌Carabobo region located in Venezuela's vast Orinoco Belt.

"Chevron's history in Venezuela spans more than a century, and our expanded position reflects our confidence in the country's deep resource potential ​and its ability to compete for investment within our portfolio for decades," Chevron CEO Mike Wirth said in a statement.

The announcement comes just days after U.S. President Donald Trump unveiled an unprecedented deal involving a fifth of Venezuela's oil reserves, with the American government taking an equity stake in a private oil firm operating there. Chevron's expansion is separate from that endeavour, but it further cements Trump's efforts expand output in Venezuela.

Venezuela has the world's largest oil ‌reserves, but its current output is only about 1.25 ⁠million bpd, down from the more than 3 million bpd it achieved two decades ago, following years of mismanagement and underinvestment by state-run oil firm PDVSA.

Venezuela's total oil output is expected to reach 2 million bpd by ⁠the end of this decade, U.S. Energy Secretary Chris Wright said on Wednesday.

Chevron said its new agreements also provide enhanced fiscal, commercial and legal terms to protect the long-term investments, adding that total production costs are expected to be less than $20 per barrel.

The joint venture's infrastructure is in good shape and development ​in ​the new areas will build off of existing facilities and pipeline infrastructure, Wirth ​said in a CNBC interview.

"Our ability to grow at low ‌cost is quite different than if we were going into a greenfield area that didn't have roads, that didn't have water, that didn't have power," he said.

Besides Chevron, oil producer ENI, investor KEO Capital and energy firm Primavera, a firm co-founded by billionaire Fred Ehrsam to invest in Venezuela, are among the companies set to sign energy agreements in Venezuela as soon as Wednesday, two sources close to the preparations said. Most pacts imply project expansions that have been in negotiation as part of the migration of dozens of energy contracts to new terms under a ‌sweeping oil reform approved in January.