Chevron, Shell Close In on Big Oil Deals in Venezuela

International oil majors Chevron and Shell are making significant strides in Venezuela after the country's new administration began to offer more favorable terms to foreign companies. According to five sources close to the negotiations, both companies are on the verge of securing big oil production deals that would allow them to boost output in coveted regions.

The agreements with Chevron include the expansion of its largest project, Petropiar, in the Orinoco Belt. The company aims to secure a reduced royalty rate and other tax incentives for the new area, which has proven oil resources but remains largely undeveloped. This would give Chevron the rights to produce from the Ayacucho 8 area and allow it to increase its output of extra-heavy oil.

Shell is also making progress in negotiations with Venezuela's government, having signed preliminary agreements last week that include developing the Carito and Pirital fields in the Monagas North region. These areas are prized for their ability to produce light and medium crude and natural gas, which is essential for blending with heavy oil.

The developments come as part of a broader effort by the US government to rebuild Venezuela's oil industry, which has suffered from decades of mismanagement and underinvestment. The country's National Assembly approved a sweeping reform of its main oil law in January, granting foreign companies more autonomy to operate and export Venezuelan oil.