Chevron CEO Ties Fresh Venezuela Investment to Lower Taxes and Royalties

Chevron’s chief executive indicated a tougher stance toward Venezuela’s tax and royalty regime, saying the company will not commit fresh capital in the country next year unless the government lowers taxes and royalties on oil production. Speaking in a Bloomberg TV interview carried in a May 29 report, Chevron CEO Mike Wirth said Venezuela needs changes to improve the economics of investing there. The remarks add pressure for fiscal clarity at a time when foreign operators are trying to rebuild investment plans after years of disruptions in the country’s oil sector.

Wirth said Chevron currently reinvests revenues it generates in Venezuela rather than funding new outside capital, operating under a U.S. Treasury-sanctioned program designed to recover debt associated with state oil firm Petroleos de Venezuela, S.A. (PDVSA). In that framework, Chevron does not appear positioned to expand materially unless the fiscal terms improve, Bloomberg Law reported. Bloomberg Law also said oil trading around $100 per barrel over much of the previous two months would support full repayment of that debt within a year, based on Wirth’s comments.

“Royalties” are payments calculated as a share of production or revenue that can meaningfully change a project’s profitability. Wirth indicated that both corporate income tax and royalty levels are central to the investment decision, Reuters reported, adding that Chevron expects negotiations to provide clarity on the specific figures. Chevron’s message is effectively that the company is prepared to continue operating, but only to the extent permitted by current constraints and economics.

Chevron’s stance comes as international energy companies seek updates from Venezuela’s leadership., citing Reuters, reported that Chevron has been meeting in recent days with interim President Delcy Rodriguez and that Chevron is working alongside peers Exxon Mobil and ConocoPhillips to negotiate new terms and consolidate contracts following changes Venezuela made earlier in the year to its oil and gas laws.

The Reuters account also said Chevron produces roughly 250,000 barrels per day in joint ventures it shares with PDVSA. A joint venture is a partnership in which two parties jointly own and operate an asset, with profits and costs shared according to agreed terms. For Chevron, that production baseline appears to be sustained under current arrangements, while new capital depends on whether Venezuela’s tax and royalty structure becomes more predictable.

The U.S. government’s licensing posture remains an important backdrop for any Chevron decision-making. In 2022, the U.S. Department of the Treasury said it issued Venezuela General License 41 to authorize Chevron to resume limited natural resource extraction operations in Venezuela, while stating that the authorization prevents PDVSA from receiving profits from Chevron’s oil sales and limits activity to Chevron’s joint ventures. In other words, even if Venezuela improves its fiscal terms, Chevron’s ability to invest is still shaped by U.S. sanctions compliance requirements.

What is not fully disclosed in the Bloomberg TV-referenced reporting is the exact package of tax and royalty changes Chevron would require, or whether the company is prepared to scale investment up immediately if terms are reduced but not fully specified. The reports also do not quantify a dollar figure for “fresh capital” or describe how much production growth would accompany any expansion.

For investors and for the Venezuelan government, the key near-term question is whether the country can offer binding fiscal certainty, including corporate income tax and royalty rates, sufficient for Chevron to move beyond reinvesting locally. The next watch item is whether Chevron and its peers reach confirmable commercial and legal terms with Venezuelan counterparts that go beyond broad commitments and specify the economics needed to justify new capital commitments next year.