Hi from Houston,

Anyone do anything fun this weekend? For me, it was a bit crazy: I joined the North American Chinese Soccer Tournament in Las Vegas, as a member of the Peking University Alumni squad in two different age groups, 50+ and 58+. I played in seven out of eight games. We won the inaugural championship in the 58+ age group. It was tiring, but we had so much fun playing, drinking, and laughing with old college buddies.

Now, time to get back to work...

Shangyou Nie

Editor, Well Read

The U.S. and Venezuela Meet Ahead of Sanctions Decision

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Officials from U.S. and Venezuelan governments met secretly in Mexico City last week to discuss issues related to sanctions. Tomorrow is the deadline for the USA to announce whether it will continue lifting sanctions against Venezuela.

Not-so-secret meeting:

• Bloomberg was first to report that U.S. officials met with representatives from Venezuelan president Nicolas Maduro’s administration to “express concerns” about the upcoming presidential election in Venezuela.

• A White House spokesman told the press that the secret meeting was held in Mexico City last Tuesday (April 9).

• The Venezuelan government issued a separate statement about the meeting, accusing the USA of not being in compliance with its prior commitments around lifting sanctions.

• The Venezuelan government said migration issues were also discussed.

Background:

• In the first edition of Well Read, we discussed the eventual successful registration of an opposition party candidate in the upcoming Venezuelan election.

• Venezuela must hold a democratic election for the U.S. to lift sanctions.

• The election will be held on 28 July, 2024. The future Venezuelan president will serve a six-year term once elected.

Why it matters:

• Lifting sanctions would allow Venezuelan oil to reach the global market, helping to lower oil prices.

• Some argue that easing U.S. sanctions on Venezuela will also help ease economic pressure there, reducing the number of migrants trying to reach the USA in the ongoing border crisis.

My prediction: The USA will likely continue partially lifting sanctions, probably with some new terms and conditions tied to the upcoming Venezuelan presidential election.

Chevron Withdraws From Myanmar

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Chevron announced that it would exit Myanmar this week. This follows withdrawals from the Southeast Asian country by other key players, including TotalEnergies, as western investors pull out.

Catch up fast:

• On Tuesday, Chevron announced that it had re-distributed its 41 percent stake in the Yadana gas field in Myanmar to PTTEP of Thailand and Myanmar Oil and Gas Enterprise.

• This brings PTTEP of Thailand’s stake in the gas field to 63 percent. The remainder goes to Myanmar Oil and Gas.

• No financial details or sales price were released, if anything was paid at all.

Why did Chevron leave?

• Chevron is trying to acquire Hess, though a legal dispute with ExxonMobil has cast doubt on that transaction’s completion.

• Chevron is focusing on unconventional play in the U.S., which has a potential to sustain production at more than 1.2 million b/d until 2040.

• Chevron’s recent acquisition of PDC and its pending acquisition of Hess will add Denver-Julesburg Basin and Bakken assets to its larger Permian position.

• Myanmar is not a strategic asset for Chevron, as the 2021 coup has made the country politically risky.

Why it matters: The exit is indicative of a larger trend: Chevron and other super majors are focusing on fewer and bigger strategic positions.

What to watch:

• If the Chevron-Hess merger goes forward, expect more asset sales. These could also come from Hess’ side of the portfolio.

• Non-core assets, particularly those in areas of political risk, will be likely candidates for divestment.

• For many international oil companies, mature Asian assets might be candidates for divestments, which could create buying opportunities for others.

Read more: Learn more about Chevron’s Myanmar divestment here.

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A Third Big Basin for Brazil?

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Petrobras recently announced an oil discovery in the Potiguar basin in the northern equatorial margin.

A new feather in their cap: Brazil’s Campos and Santos are world-class deepwater basins. Petrobras has found more than 10 billion barrels in the pre-salt reservoirs.

But, the large equatorial margin has not had similar success so far until now…

Key highlights:

• This is the second oil discovery made by Petrobras in 2024, as part of its multibillion-dollar campaign in the equatorial basins. The first was in the Pitu Oeste in Block BM-POT-17, where Petrobras found oil and gas.

• The new oil discovery well, Anhangua, is located in Block POT-M-762 in the Potiguar basin.

• Oil was found in Cretaceous Albian-aged turbidite reservoirs.

• Commerciality is yet to be proven for either 2024 discovery.

Risks and considerations:

• Deepwater exploration is a high risk and high reward pursuit. Initial success or failure is just that, initial.

• Many independent oil companies have said that they would cut down, if not completely abandon (e.g. BP), frontier deepwater exploration programs due to long lead times, as well as energy transition and climate concerns.

• Petrobras is one of the few exceptions.

• Brazil’s equatorial margin is not only technically risky, but also environmentally sensitive.

Why it matters:

• If successful, Brazil will open a third major deepwater basin; providing a great opportunity for service companies in Latin America, similar to ongoing oil development opportunities in Guyana and Suriname.

• Independent and national oil companies could become new investment partners for Petrobras to explore and develop oil resources, as in Campos and Santos basins.

What to watch:

• Petrobras is scheduled to drill another exploration well, Morpho, in the Foz do Amazonas Basin, as part of a 16-well exploration campaign.

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