(Bloomberg) -- One of the key reasons Venezuela’s economy is slowly recovering from the worst collapse in modern history is an oil giant 2,200 miles away: Chevron Corp.
The Houston-based company, which has a US waiver to operate in Venezuela despite sanctions against Nicolás Maduro’s authoritarian regime, has helped lift the Andean nation’s crude production back above 1 million barrels per day, stoking an economy that lives and breathes oil.
Now Donald Trump is poised to leverage Chevron’s presence in Venezuela to get what he wants from Maduro.
The 2022 license that’s seen Chevron ratchet up exports from Venezuela to a seven-year high is the most powerful tool the president has to advance his agenda in Caracas, which includes following through on his campaign pledge to halt irregular migration into the US. Cancelling the waiver would sever a vital financial lifeline for Venezuela’s economy as it begins to perk up — and generate more corruption by handing the government full control of oil trading again.
Chevron has been operating in Venezuela for more than a century. But the company has only recently begun to exert an outsized influence on the nation’s economy.
There are two main reasons. First, as Venezuela’s state oil company deteriorated from chronic underinvestment, Chevron became the driving force behind any growth in oil production. Second, after Venezuela’s living standards collapsed amid Maduro’s failed policies and US sanctions, that output from Chevron became a much bigger slice of the nation’s shrunken economy.
Ventures run jointly with Petroleos de Venezuela SA are estimated to have contributed some $4 billion in tax payments over the past two years, representing about a quarter of the regime’s total revenue over the same period, according to Ecoanalítica, a Caracas-based consultancy. Venezuela’s economy, meanwhile, is on track to grow 9% this year.
“Chevron’s activity has introduced a crucial element for the country’s macroeconomic stabilization,” Asdrúbal Oliveros, one of Ecoanalítica’s directors, said by phone. “It has jump-started the economy by adding jobs and new service contracts for the recovery of wells, and by sales of foreign currency to the domestic market.”
The revenue Chevron generates in dollars from rising oil production stays in the country and mostly gets reinvested in local currency through private banks, which can lend to companies that help boost the economy — all out of the clutches of the government. Some trickles down to consumers, helping fuel an incipient recovery that’s seen luxury stores, retail chains and car dealerships open in the capital even as a majority of Venezuelans remains impoverished.
It hasn’t, however, come with free and fair elections as former President Joe Biden hoped when he carved out a loophole in Trump’s first-term sanctions for Maduro.
But in a bold step, Trump started fresh with the socialist strongman after sending a top adviser to Caracas at the end of January. The move resulted in the release of six American prisoners and the restart of deportation flights, another of which arrived Thursday carrying about 180 people who’d been expelled from the US to Guantanamo Bay.
While it’s unclear if energy issues were discussed during special envoy Ric Grenell’s talks with Maduro, Chevron’s license was left untouched. It renewed automatically for six months the next day, as it does the first of every month.
“The license is a very challenging card to play,” David Goldwyn, head of the energy advisory group at the Atlantic Council, said by phone. “Chevron’s activity in Venezuela is in both country’s interests, as it’s having an efficient player helping the Venezuela economy from falling back and preventing migrants from coming back.”
Trump is keeping his options open. The US company’s operations in the sanctioned nation are currently under review, the president told reporters on Feb. 18 at his Mar-a-Lago club in Florida. Asked whether he would be inclined to continue to allow oil exports through Chevron, Trump said: “Maybe not.”
White House officials didn’t respond to emailed requests for comment on Friday.
The million-barrel mark is a substantial milestone for Venezuela, which saw output tank to as low as 365,000 barrels per day from a high of about 3.2 million in the mid-1990s. The oil sector is projected to grow 17% by the end of 2025, about the same as last year and up from a 13% expansion in 2023, according to Sintesis Financiera. The increase is being led by Chevron’s “steady” activity, said Tamara Herrera, head of the Caracas-based financial analysis firm, who described the US company’s work with PDVSA as professional and efficient.
“Chevron has been a constructive presence in Venezuela,” company spokesman Bill Turenne said by email. All business, he added, is conducted “in compliance with all applicable laws and regulations.” Representatives of PDVSA and Venezuela’s government didn’t respond to requests for comment for this story.
Contractors hired by Chevron have seen a surge in work, with subsequent increases in revenue and hiring, mainly in the eastern Venezuelan state of Anzoátegui, where two of the ventures with PDVSA are located.
New and more liberal contracts offered by the Maduro regime after the waiver was issued allowed the company to gain greater control over finances and trading at the ventures, undoing years of erratic PDVSA management.
Since 2023, Chevron offered more contracts for bids to companies it had already vetted, according to a person familiar with the operations, who asked not to be named because they aren’t authorized to speak publicly. The company also directed more of its cash flow to maintenance, procurement and human-resources issues. “This has had a multiplying effect in the economy in Anzoátegui, and the country,” Herrera said.
Chevron sells dollars into the private financing system to buy bolivars that it uses to pay for its operations. The steady flow of foreign currency has helped private importers buy dollars for their purchases, keeping supplies of goods coming and inflation in check. “In a highly import-dependent country like Venezuela, this is very important for domestic consumption,” Herrera said.
Annual inflation has slowed to 8% from a six-digit peak. And the bolivar has stabilized after steep devaluations. To be sure, the recovery Maduro is presiding over has also been helped by a smaller economy — the result of a mass exodus of people and broad private-sector destruction under his autocratic rule.
On the trading side, oil sales are now more transparent and fetch better prices, a departure from previous years when PDVSA’s total control led to corruption and huge discounts in the Asian market. Chevron’s increased oversight has also helped alleviate Venezuela’s perennial fuel crisis because it doesn’t rely on PDVSA’s dwindling production of diluent and instead ships its own from the US.
Chevron, the only US oil producer left in Venezuela, is currently pumping about 240,000 barrels a day, or nearly 23% of the country’s overall production, representing around $6 billion in revenue. That level of output is similar to what the company produced in 2018, before Trump first hit Maduro with sanctions.
So while the US president’s team is sending mixed signals this time around, the Atlantic Council’s Goldwyn is cautiously optimistic Chevron will be allowed to keep pumping crude given how essential it’s become to keep Venezuela’s economy from cratering again.
“The Trump administration realizes the ‘maximum pressure’ policy caused economic stress that led to migration into neighboring countries and didn’t result in political change,” he said. “We’re in the early days of the Trump administration and we still need to see if Maduro is cooperative.”
