Following the arrest (and imprisonment on treason charges over a contract dispute with PDVSA) of two of its workers, Reuters reports, citing four people familiar, that Chevron has evacuated executives from Venezuela.
Tensions have been rising for over a week as OilPrice.com's Julianne Geiger reported two Chevron Corp. workers arrested in Venezuela last week could face treason charges, according to sources quoted by Reuters on Monday.
The draft charges that used the word treason, seen by Chevon’s own lawyers last week, may put Chevron squarely in the middle of the escalating feud between PDVSA and foreign oil companies at best, and between the Trump Administration and Maduro’s socialist regime at worst.
The employees, who oversaw the Petropiar project co-owned by PDVSA and Chevron, were jailed when they allegedly refused to sign supply contracts concocted by PDVSA that skipped the normal competitive bidding process, according to multiple sources. The parts mentioned in the contract were reportedly double the fair market price.
The Petropiar joint venture consists of PDVSA’s 70 percent share, along with Chrevron’s 30 percent. It was reported a year ago that PDVSA had offered Rosneft a 10 percent stake in the project—a stake worth $600 million-$800 million, according to valuations of similar deals as reported by Reuters back in August.
With Venezuela already in turmoil as oil production continues to fall in the crisis-stricken country, strong-arming the already-dwindling foreign players in-country may prove unwise.
Another foreign oil major doing business in Venezuela, French Total SA, announced just last week that despite the near-economic collapse, it would stick it out there—even as the European Union discussed stricter sanctions on the Latin American country.
Other oil majors have given up on Venezuela already, after in mid-2000, then Venezuelan President Hugo Chavez confiscated a 60-percent share in all oil projects in country and turned them over to PDVSA.
Other oil majors operating there have recently spirited employees out of the country, citing safety concerns—a move that now seems particularly prudent given the treason charges that two Chevron employees may soon find themselves up against.
Chevron did remove an unspecified number of employees from Venezuela back in August 2017.
But now, as Reuters reports, having evacuated a number of executives from Venezuela, Chevron asked other employees to avoid the facilities of its joint venture with the OPEC nation’s oil firm, the sources said.
Chevron’s move to evacuate its expatriate workforce underscores the how arduous it has become for foreign oil firms and their workers to sustain operations through Venezuela’s accelerating political and economic meltdown.
The affected staff numbers about 30 people in the coastal city of Puerto la Cruz, although it is unclear how many people Chevron has already removed from the country.
Chevron refused to comment, advising that these were "personnel matters."
Chevron has no plans to exit the country, Reuters reports according to a company employee familiar with the thinking of its board of directors. The oil company has not pulled out of other tough environments in the past, the person said - citing the jailing of employees in Indonesia in 2013 - and the firm believes Venezuela will eventually stabilize.
As Venezuelan production crashes, the arrests mark an escalation of tensions between PDVSA and foreign companies over control of supply contracts and the joint ventures’ governance, sources familiar with the dispute told Reuters.