Venezuelan oil offers little to both the US and Chevron

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Barco petrolero en Puerto José (Venezuela).

The country’s oil fields are no longer as profitable, and they emit a lot of greenhouse gases

US President Joe Biden is open to Venezuelan oil. Over the weekend, the Treasury Department granted $355 billion oil giant Chevron a license to resume limited production in the country. That helps spread out fossil fuel extraction, and could ease prices at the margin. But between the filth of Venezuela’s oil and the decrepitude of the oil fields, help is limited.

Venezuela sits on the world’s largest oil reserves, producing more than 3 million barrels of crude a day in the late 1990s and exporting 1.8 million barrels a day to the United States, according to the Energy Information Administration. from this country.

The constant tightening of sanctions caused Venezuelan oil production to fall by about three-quarters over the years. Although Chevron, under the license, cannot open new fields, it can start pumping from existing ones.

If the fields return to pre-sanctions levels, the company will produce about 200,000 barrels a day. For Chevron, it is a drop of water, less than 7% of its daily production. Chevron is owed more than $4 billion from its projects in Venezuela with Petróleos de Venezuela, which it should recoup. But the license prohibits its Venezuelan partner from making a profit, so prospects for further production appear limited. And, this year, the company is expected to have net income of $38 billion from sources around the world, according to Refinitiv.

The easing of restrictions does not benefit the average American either. Oil equipment is degrading and highly skilled workers have fled the country. As a result, the deposits are not as prolific, and the oil could be more expensive to extract.

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This production in Venezuela would be equivalent to about 1% of US demand. In addition, the Venezuelan Orinoco is also among the most greenhouse gas-intensive fields in the world, with roughly twice the total emissions per barrel of Saudi Arabia’s Ghawar field, according to an index created by OCI+. If countries, including the United States, start to take stricter measures on emissions, the costs of cleaning the oil could be passed on.

The urgency of having diverse sources of fossil fuels has become more evident since the Russian invasion of the Ukraine sent prices soaring. But the price of a barrel of Brent crude has fallen by about a third since the beginning of March. Biden has made climate a key element of his presidency. But climate change is a global problem, and by sharing a table with US oil producers in Venezuela, you are also shaking hands with a country with a less than exemplary human rights record.