Chevron Corp., the only American company with authorization to still operate in U.S.-sanctioned Venezuela, isn’t planning any new capex in the South American country, CEO Mike Wirth said during the California-based company’s quarterly webcast.

“I'll just remind you. We're not putting new capital into Venezuela right now. All the spending is really self-funded from the cash from operations,” Wirth said during the company’s April 26 quarterly results webcast. Wirth made the comments in response to analyst questions about its operations in the South American country.

“We've been lifting oil and bringing it to the U.S., which has been helpful for the U.S. refining system, not just ours but others as well,” Wirth said.

The U.S. Office of Foreign Assets Control (OFAC) recently issued General License (GL) No. 44A in replacement of GL 44, which was issued by OFAC in October and expired on April 18. GL 44 authorized transactions in Venezuela spanning the production, lifting, sale and export of oil and gas to the payment of invoices and new investments.

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The newer GL 44A, issued on April 17, mandates a 45-day wind-down period for most companies through May 31. The move came after Venezuela failed to live up to election reforms the U.S. government had demanded.

However, GL 44A doesn’t impact Spain’s Repsol or Italy’s Eni, which have comfort letters that allow them to continue operating.

GL 44A doesn’t impact Chevron either, since the company can still operate in Venezuela under GL 41, issued by OFAC for the company alone. Since being issued GL 41 in November 2022, Chevron has significantly boosted its production in particular and that of Venezuela in general.

“Since that license was issued now a little bit more than a year ago, we've seen production at the joint ventures that we're participating in increase from about 120,000 barrels a day at the time that license was issued to about 180,000 barrels a day now,” Wirth said.

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Chevron Vice President and CFO Eimear Bonner told analysts it was important to remember that the company was using cost accounting and not equity accounting in Venezuela.

“Chevron is not recording the production here or the reserves. We record earnings when we receive cash, and that shows up under other income and [on the] income statement,” Bonner said. “Just to put this into context, in 2023, the cash was modest, probably less than 2% cash flow from operations.”

Race to finish Hess deal continues

Chevron’s plans to acquire Hess Corp. in a $53 billion all-stock deal, primarily for the New York-based company’s 30% interest in the prolific Stabroek Block offshore Guyana, have not changed—despite unexpected headwinds.

The principal headwind relates to Exxon Mobil Corp. and China National Offshore Oil Corp. (CNOOC) as they pursue what they argue is their right of first refusal (ROFR) over Hess’ interest in Stabroek. There, Exxon leads the three-company consortium with a 45% interest, Hess with 30% and CNOOC with 25%.

Wirth said there were three things to consider in terms of the “sequencing and timing” related to the Hess deal and arbitration matters with Exxon and CNOOC—shareholder approval, regulatory Federal Trade Commission approval and arbitration.

Wirth said the shareholder vote will happen in May and that he expects the FTC approval process to be “substantially complete” by midyear. As for arbitration, which Wirth said was less well defined, scheduling and timeline will be laid out by the arbitration tribunal.

Wirth said Hess has asked the tribunal to hear the merits of the cases in the third quarter of 2024, with an eye on having an outcome announced in the fourth quarter, “which would allow us to close the transaction shortly thereafter.”

“We see no legitimate reason to delay that timeline,” Wirth said.

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