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Chevron is expanding its existing operations in Venezuela, the Houston-based company said Wednesday. This comes in the wake of Friday's announcement that Venezuela will give the U.S. access to 65 billion barrels of oil.

The company will expand its operations in the Orinoco Belt, where much of Venezuela's oil reserves lie.

"Today is a transformative day," said U.S. Secretary of Energy Chris Wright, speaking at a press conference this morning at the Miraflores Palace in Caracas, alongside Chevron CEO Mike Wirth and Venezuelan President Delcy Rodríguez. "The catalyst for transforming Venezuela is energy. The catalyst for improving the life conditions of Americans, our hemisphere, and everyone in the world, is to massively expand energy production around the world."

"Today's agreement is an important milestone for Chevron, our partners, and the Venezuelan people," said Wirth. "It reflects progress toward a more competitive and durable framework for long-term investment. Importantly, it creates the opportunity to unlock growth and development."

Chevron is the largest foreign oil operator in Venezuela. The deal announced today expands its footprint at a time of political and economic uncertainty for Venezuela; the country has been run by an interim unelected president, Rodríguez, who came into office after the U.S. captured former President Nicolás Maduro in January.

Other U.S. oil companies have previously expressed hesitation about re-entering Venezuela after leaving it decades ago, with ExxonMobil CEO Darren Woods calling the country "uninvestable" at a White House meeting in January.

In an online statement posted this morning, Chevron says as part of a joint venture, it plans to invest over $7 billion over the next five years. This, the company says, will expand its production to approximately 600,000 barrels of oil per day.

The Chevron deal comes less than a week after the Trump administration announced a new deal to develop 17 Venezuelan oil fields — with an estimated 65 billion barrels of oil — in a joint venture with North American Blue Energy Partners, a private oil company headquartered in Barbados. It also comes as President Trump has encouraged American oil companies to invest in Venezuela's oil operations.

Venezuela's been an oil-producing nation for around a century and was a founding member of OPEC, the Organization of the Petroleum Exporting Countries. Chevron first established a presence in Venezuela in the 1920s. It stayed even after the country nationalized its oil industry in 1976, and later tightened control over its oil industry in the 1990s under then-President Hugo Chávez. Rivals ExxonMobil and ConocoPhillips left in 2007 after Chavez renegotiated contracts with international companies.

While Venezuela is sitting on some of the world's largest oil reserves, they are still underground. It will take some time and effort to refine and extract.

"It's a little bit like sitting on a lottery ticket that's just a little bit out of our reach, and you're always having to try to stretch yourself to get it," says Alejandro Velasco, a New York University historian who specializes in Venezuela and Latin America.

Much of the country's oil infrastructure has been in disrepair for more than a decade. Velasco says corruption and low oil prices in the early 2000s contributed to the dilapidated state of Venezuela's facilities. In refineries today, he says, one would see rusty equipment, leaks, even broken fences where copper thieves came in to steal wire.

"All of [the challenges] need to be solved before even thinking about increasing production in a sustained manner," says Jorge Leon, head of geopolitical analysis at the independent research firm Rystad Energy. In January, Rystad analysts said it would take more than a decade, and $183 billion, to effectively restore Venezuela's oil production to a 1990s-era level of around 3 million barrels a day.

Tagged: Chevron

Chevron to expand in Venezuela, days after the U.S. and Venezuela strike oil deal