Venezuela is expected to more than double its crude oil production in the coming years as new deals with energy companies are set to be announced.
US Energy Secretary Chris Wright said the deals were close to being finalized after he arrived in Caracas on Tuesday night. The deals are expected to accelerate investment and expansion in Venezuela's oil sector.
Wright is scheduled to meet with Venezuela's acting President Delcy RodrÃguez during the visit. More than a dozen energy deals are expected to be announced on Wednesday, with Chevron among the main players involved.
Chevron Expands Operations in Orinoco
Chevron is expected to expand its operations in Venezuela, including through the development of two giant oil fields in the Orinoco Belt.
In addition to Chevron, Shell, BP, Spain's Repsol and Italy's Eni are also expected to sign new agreements to boost oil production in Venezuela.
The move is in line with US President Donald Trump's administration's efforts to attract more Western energy companies to Venezuela and reduce the influence of Chinese and Russian companies in the country's energy sector.
US Wants to Boost Oil Supply
The development comes as the Trump administration faces pressure to lower US gasoline prices. Gasoline prices have risen more than 40% this year in the wake of the Iran war, making energy supply issues increasingly important ahead of the November midterm elections.
At the same time, the US wants to re-use Venezuela's vast oil capacity after years of underinvestment and deteriorating infrastructure.
Venezuela has some of the world's largest oil reserves, but output has been hampered by broken pumps, leaking pipelines and erratic electricity supplies.
Venezuela's Oil Reserve Plan
The announcement of the new deal with the energy company is separate from a plan Trump announced on Friday to gain control of about 65 billion barrels of Venezuela's oil reserves through a partnership with a private energy company.
The plan is seen as a major US effort to gain long-term access to Venezuela's oil resources, improve America's petroleum supply security and help replenish the dwindling US Strategic Petroleum Reserve.
Production Won't Rise Immediately
While Venezuela's production potential is huge, the increase in output is not expected to happen anytime soon.
Analysts say the recovery of Venezuela's oil sector will take time because its infrastructure has long suffered from damage and lack of investment.
This means that increased production may help replenish global oil supplies in the coming years, but the impact on US gasoline prices in the coming months is expected to be limited.
