Chevron to Add Ayacucho 8 Block, Shell Nears Venezuela Oil Production Deals
Chevron and Shell are finalizing large oil production agreements in Venezuela’s Orinoco Belt following the U.S. capture of President Maduro. Chevron’s preliminary terms grant rights to the Ayacucho 8 block, enabling a potential output boost above its current 110,000 bpd at Petropiar under reduced royalties.
1. Negotiations and Legal Framework
Chevron and Shell are finalizing major production agreements with Venezuela’s energy authorities, representing the first significant foreign involvement since the U.S. capture of President Maduro in January. This follows a sweeping reform of Venezuela’s main oil law in late January, granting foreign companies autonomy to operate, export and sell oil even as minority partners of state-owned PDVSA.
2. Chevron’s Ayacucho 8 Expansion
Under preliminary terms, Chevron would expand its largest project at Petropiar by securing rights to the Ayacucho 8 block in the Orinoco Belt. This area contains proven extra-heavy oil resources, allowing Chevron to extend its well-cluster production system from Petropiar and accelerate output growth.
3. Production Capacity and Incentives
Chevron and PDVSA currently produce around 90,000 barrels per day of upgraded Hamaca crude and 20,000 bpd of vacuum gasoil at Petropiar. The Ayacucho 8 deal aims to leverage reduced royalty rates, tax and trade incentives offered under the new law to increase heavy oil production.
4. Strategic Implications for Chevron
Approval of Ayacucho 8 would mark Chevron’s fifth oil area in Venezuela and position it as the largest private producer in the Orinoco, home to over 75% of the country’s crude reserves. This expansion aligns with U.S. objectives to rebuild Venezuela’s oil industry valued at $100 billion after decades of underinvestment.