Chevron to Invest $7 Billion to Double Its Venezuelan Output

0:00Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro plans.

0:43Game night rush, or any night of the week, really, Genius keeps every order moving. From online ordering to your kitchen to the front counter. Big League reliability for any business. That's genius. At Venture Global, we think about what can be done, not what's usually done. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.

1:51All right. U.S. Energy Secretary Chris Wright is in Caracas today and is expected to announce more than a dozen agreements with energy companies. The largest is with Chevron, which is significantly expanding in Venezuela operations with two giant oil fields in the Orinoco boat. We check in with Kevin Crowley. He's the senior oil reporter for Bloomberg News. He is based down there in the energy capital, Houston, Texas. Kevin, thanks so much for joining us here. You know, when you talk to folks in your sphere there of the energy business, what do they think about the Chevron deal? Well, first of all, it's a big it's a big it's a big deal.

2:29I think the the first question is, is how much oil is going to come to the market immediately? And I think I think it's it's it's going to come gradually. This is what the CEO Mike Worth told us in a TV interview earlier today. day. So Chevron is planning to double its oil production to about 600 ,000 barrels a day, going to spend about$7 billion with its joint venture partners doing that. But these are big, big, big projects requiring lots of drilling, lots of heavy equipment, lots of pipeline capacity. Venezuela has a lot of heavy oil, which is difficult to process. So these barrels are going to come to the market kind of gradually.

3:11And what's interesting here is that they are not going to be a direct replacement for the barrels that uh currently stuck through the uh through the straight or four moves um so we're not seeing any relief in oil prices today yeah that's exactly right so kevin what do we know about some of the assurances that chevron may have received either from the venezuelan government or the u.s government because that has always been a concern that boy our assets our investments can be nationalized overnight and that's one of the many reasons that other majors left Venezuela and did not come back. Right, exactly.

3:45I mean, Venezuela's nationalized the oil industry twice in the last 50 years. So I put this question to Chevron CEO Mike Wirth in an interview, and he said he wouldn't go into the contract specifics, but he said there were very strong protections built into those contracts with regards to, and I interpret that to mean sort of legal protections. but also with regard to arbitration. So if there is a dispute between Chevron and the Venezuelan government, they would be arbitrated in perhaps internationally as opposed to in the country. So Chevron seemed pretty confident that their money will be protected.

4:30Now, it is worth saying Chevron has a slightly different kind of risk tolerance for this. I mean, Chevron was the one U.S. oil major that stayed in Venezuela after the nationalizations of the mid-2000s. They've been there the last 20 years through all these sanctions and on and on again, off again, OFAC licenses and that. So they are in a slightly different position. We haven't seen Exxon go in. We haven't seen ConocoPhillips go in. These were two big U.S. oil companies that were nationalized under the Chevron regime. Yeah, that's kind of where I want to go, Kevin. And do we think that once maybe Exxon and the others get a look at this contract or at least talk to the Chevron management, they might get a level of comfort that they will go back in, do you think?

5:14Well, that's certainly what the U.S. government hopes, that all these deals will create a level of confidence for others to follow. I think there will be others to follow. The problem is these fields are getting nabbed. They're getting snapped up quickly. And Exxon, for example, doesn't want to do anything small. So if they want to go in, they'll want a large number of fields and they want to do things on a big scale. And, yeah, the question is what's left. So, yeah, so it remains to be seen who else will go in. But certainly with these big companies now committing real dollars, this is the first time we've seen real dollars being committed to Venezuela.

6:02way like there is a there is a degree of confidence um around uh around the country what are your sources telling you kevin about the strait of hormuz how much oil do we think is actually getting through on a daily basis we heard from the treasury i mean the energy secretary a big big number what are you hearing yeah so he was saying he was saying on monday 17 million barrels uh got through got through the strait of hormuz um that's certainly a high uh we don't think that's that's happening every day at all. There's still major constraints. I mean, we've seen a fair bit of uptick in conflict, I mean, just this week.

6:39And it's interesting, there seems to be a tone around the administration this week. Certainly, Secretary Besant and Chris Wright have been emphasizing this line around workarounds, emphasizing, you know, we're going to build pipelines and there's going to be other ways of getting around the straight of Hormuz. I think Besson said earlier today that straight of Hormuz wouldn't be very important in the oil industry in the future. So I just wonder if this if this if this they're starting starting to kind of think that this this conflict maybe maybe maybe much more longer term and this might be the the new normal for the straight.

7:21Stay with us more from Bloomberg Intelligence coming up after this. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects.

8:03Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro plans. With LPL Financial, we provide the services to help push you forward. When it comes to your finances, your business, your future, the only question should be, what if you could? Payton advertisement. Anna Kendrick is not a client of LPL Financial LLC and receives compensation to promote LPL. Investing involves risk, including potential loss Principal LPL Financial LLC member, FINRA, SIPC. You already know how AI is changing how everyday work gets done, how much ground you can cover, and how fast a team can scale.

8:34To stay ahead, you need the tools that give you a competitive advantage, built for this new era. Welcome to Agentic Revenue. Adio is the CRM for this world. It meets you where you work, compounds every customer signal into context, then axon it across your pipeline to let you move in on match speed and scale. With agents and automations for every job in revenue, Adio orchestrates your work around the clock. Built to handle the scale of your workloads, extensible with API and MCP, and with the infrastructure to keep up with your most ambitious agents. Loved by high-growth startups like Granola, Modal, and Etched, Adio runs the work behind every win.

9:09That's Adio, the agentic CRM, the intelligent system that never sleeps. Picks up leads at 2 a.m., catches renewals before they slip, hands you the answer before you ask. Try Adio free at adio.com slash iHeart. That's adio.com slash iHeart.

9:30You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. There are a lot of people that don't like higher energy prices. And I guess if you think about it, if you put gas in your truck or diesel in your truck or jet fuel in your plane and that kind of stuff, if you're a transportation company, this is a squeeze, I think. Let's check in with Lee Klaska. He's a senior transport logistics and shipping analyst for Bloomberg Intelligence.

10:02He also hosts a weekly podcast, Bloomberg Intelligence Talking Transport. Lee, what are your companies telling you? Railroad companies, trucking companies, air transport. I mean, the tankers, they all consume a lot of fuel. They certainly do. It's usually their highest cost, and they're able to pass a lot of that cost on through fuel surcharges. The problem is the volatility in fuel prices can be sometimes a drag on margins, especially when prices for fuel are rising quickly. Trucking, for example, their fuel surcharges resets every week. And railroads, it's anywhere between a week and 60 days, depending on the type of freight.

10:40But while it does cover the miles that they travel, You know, as you probably know, trucking companies, sometimes they have to travel from point A to point B to pick up a load. And that's obviously not covered under the fuel surcharge most of the time. So it does it does have a, you know, a negative impact to margins. But, you know, I think the knock on effect obviously is the impact to consumers. It's inflationary. You know, when you're spending more at the pump, you're buying less stuff and stuff is shipped in trucks and trains. And so that's probably less opportunity for freight for them. So, you know, that's a big concern.

11:13Yesterday, the whole group was down, probably on the fact that oil rose a little bit yesterday, and coupled with the fact that the ISM index, which while still in expansion territory, was slightly below expectations. Do companies ever remove the fuel surcharge, or does it only go up and up and up? Well, it sometimes comes down. So when fuel prices come down, it does come down. So when fuel prices are coming down quickly, it's actually a tailwind for earnings because they are charging the customers a price higher than what they're actually paying for today because of the lag effect. They're slower to remove the fuel surcharge or bring them down.

11:57So for trucking, for example, they reset every week and it's based on the price of diesel, the national price of diesel. By the way, the national price of diesel,$5.68 a gallon, according to AAA. Five months high. Yep. My son has a hybrid. He doesn't care. He's laughing all the way. Your stocks have been ripping, Lee. I'm looking at some of the trucking stocks up 30%, 40 % this year. The railroad stocks up big this year. What's going on? So there's two things. The space is obviously early cycle, and people are a little excited about what's going on with the industrial economy, given the data center build-out that's really been helping with freight.

12:34That coupled with, you know, ag has been pretty good as well. That's one thing. But really what's probably primarily driving it is a tighter trucking market. The trucking industry has been terrible for the last three or four years. And up until about six months ago, you've seen rates starting to inch off really depressed levels. And the levels that were a lot of trucking companies were not making money and a lot of trucking companies were leaving the industry because of bankruptcies or they just couldn't make any more, make money and make a go of it. And so what we've seen is we've seen rates considerably rise in the spot market, and that's really been driven by a lot of federal initiatives.

13:09They are forcing states to enforce rules that are on the book about English language proficiencies. They've been shutting down a lot of driving schools that have pumped out drivers that don't even know how to drive a truck. It's been pretty ridiculous. I think the Trump administration, for everything that you could say about what they're doing with trade, has done really great things when it comes to the trucking industry, because it's making the industry safer, and it's obviously making the road safer for everybody. Right, but if they're closing down these commercial driving training schools, that means it's harder for these truckers to actually hire.

13:45How are they addressing that? How are they solving for it? Yeah, so they're going to have to pay more for truckers, and then therefore the shippers... Have they started to do that? Yes. So if you're a trucker and you're working for a trucking company, you probably can go to a different trucking company and get a signing bonus. And, you know, while there's some loyalty when it comes to working at a trucking company. Not like airline lounges. At the end of the day, they get paid per mile, right? And they want to be treated well. And so, you know, if they're slightly unhappy with the way they're treated, you know, they're happy to go down the street to another trucking company and maybe have a$10 ,000 signing bonus, you know, if they reach certain criterias.

14:22So you are seeing that. And that is really what's going to be really interesting in the trucking market is that this cycle, this upcycle in rates is really going to be elongated. And it's going to be well beyond the typical 12 to 18 months because of these structural changes. Because a lot of these drivers that were kicked out, they're never coming back in. Where in past cycles, they would go work in construction and warehousing, and then they would come back. And cycle back in. Yeah. And so what you're seeing is you're going to see a real structural change. And then, no, to answer your question, autonomous trucking is not there.

14:54They're not going to really fill the void. So it'll be a very interesting couple of years for the trucking industry. And what's great about trucking is the spot market within the truckload industry kind of ripples across all other modes. So then when spot markets rise, contractual markets rise, and the less than truckload rates get better, then intermodal rates get better, railroad rates get better. And so that will have a knock on effect for all freight rates in 2027 should be a pretty robust year for rates. More inflation for us, Paul. That's exactly right. Quick update on what is it? CSX and Union Pacific, the merger to create the first Norfolk Southern.

15:32Norfolk Southern. OK, so where are we on that? They just the the STB, the regulator just said, OK, all the paperwork's in. We're going to start looking at the merits of the deal. And so what you're going to have is you're going to have both sides of the argument, press their case, and we're going to get some sort of a ruling, not until late 2027. Late 2027. It takes a long time. No kidding. This thing was announced, what, six months ago? A year ago. A year ago. The government moves slowly. Lee, do you watch The Gilded Age? I don't. Oh, it's on HBO. Anyway, it's really good. and it's about like the railroad barons and when they were doing a lot of stuff and just expanding their empire.

16:13People liken the AI CapEx to like the railroad CapEx. Yeah, yeah, yeah, yeah. Taking over the world and making everyone pay up. Yep. All right, Lee, thanks so much. Appreciate it, Lee. Class guy, he's a senior transport, logistics, and shipping analyst for Bloomberg Intelligence. He also hosts a weekly podcast called Bloomberg Intelligence Talking Transports. Stay with us. More from Bloomberg Intelligence coming up after this.

17:05that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro plans. With LPL Financial, we provide the services to help push you forward. When it comes to your finances, your business, your future, the only question should be, what if you could? Paid advertisement, Anna Kendrick is not a client of LPL Financial LLC and receives compensation to promote LPL. Investing involves risk, including potential loss of principal LPL Financial LLC member FINRA, SIPC.

17:39You already know how AI is changing how everyday work gets done, how much ground you can cover, and how fast a team can scale. To stay ahead, you need the tools that give you a competitive advantage built for this new era. Welcome to Agentic Revenue. Adio is the CRM for this world. It meets you where you work, compounds every customer signal into context, then acts on it across your pipeline to let you move it on match speed and scale. With agents and automations for every job in revenue, Adio orchestrates your work around the clock. Built to handle the scale of your workloads, extensible with API and MCP, and with the infrastructure to keep up with your most ambitious agents.

18:16Loved by high-growth startups like Granola, Modal, and Etched, Adio runs the work behind every win. That's Adio, the agentic CRM, the intelligent system that never sleeps. Picks up leads at 2 a.m., catches renewals before they slip, hands you the answer before you ask. Try Adio free at adio.com slash iHeart. That's adio.com slash iHeart.

18:43You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Another stock that is on the move this morning is Uber. The shares have picked up some steam, now up 1.4 percent on news that it is cutting about 3 ,300 jobs. That's about 10 percent of its staff globally. Mandeep Singh is our global head of tech research here at Bloomberg Intelligence. He's in studio with us right now. So, Mandeep, this is very much about turning Uber into a leaner company as it reallocates some of its spending into the things that bring a lot more value, like robotaxi businesses.

19:28Yeah, I mean, look, when it comes to Uber, it feels like the hyper growth phase is passed. And now this company is growing, you know, at a very respectable about 18 to 20 percent top line. but when it comes to robo-taxis or autonomous vehicles, they're facing a lot of pressure from Waymo, which is going out on its own. Tesla, we know they have ambitions and they all are launching their own apps. And from a consumer standpoint, again, we've talked about this in the past, they don't have any loyalty. They will download their own apps and Uber is starting to feel some pressure on their take rates as well.

20:12So from that perspective, optimizing the cost structure, when you're spending almost$50 billion, the total cost and expenses are close to$50 billion. It's hard to imagine that for an asset-like company, which actually brings a lot of external-like, they don't even own the fleet. Why do they have such a big employee base and cost structure? So it doesn't surprise me that they are doing it irrespective of AI optimizing some of that. And it makes sense. I'm glad you bring up the lack of loyalty because Paul Sweeney is notoriously not loyal to any car ride operator, right? Arbitrage last night, South Amboy.

20:53Don't ever take a car from South Amboy. Down to the shore, 25 % savings. Almost arbitraging that. How about that? That's real money. I'm gaming the system, as they say. He's winning. What's the latest thinking, Mandeep, in the industry about autonomous vehicles and the threat it may pose longer term to some of these ride sharing companies? I think it is a big threat. I mean, the thing that saved the likes of Uber so far is it's still a very small fraction of the overall rides. I mean, when you think about how many rides Uber does in a year, it is, you know, close to 12 billion plus rides. So from that perspective, autonomous vehicles, which are there in more than 10 cities now, even Vamo is there across a lot of the U.S.

21:42cities. It just hasn't had the share of volume and the fleet you require to scale. But everyone likes the experience. And so that is the threat. Like once you ramp up AVs and if AI helps expand the AV fleet, then that becomes a big risk. And Uber, to their credit, has made a lot of investments. They don't have their own AV technology, but they have invested a lot in Neuro and a lot of the other companies in the ecosystem. So it sounds like they will end up using these cost savings to make more AV related investments. I don't think it's going into buybacks. Yeah, Waymo, very much a tourist activity in places like the Bay Area.

22:22Yeah. Yep. I took one. See? Yeah. I mean, again, Paul, not loyal to any ride-hailing company, but he will go in a Waymo because it was a fun thing to do. He goaded me into it. All right. Promised me a meal at In-N-Out Burger. All right. That's worth it. That's worth it. Mandeep, we also want to get your take on NVIDIA and this$14 billion deal for Hugging Face. That's what the reporting shows. What is Hugging Face? So Hugging Face, I think the best comparison is they are a repository of all the models. We talk about Frontier Labs and open source models. And if you are a company that wants to deploy an LLM, open source LLM, Hugging Face has the repository of all the versions of open source LLMs.

23:08And so from that perspective, they are like the GitHub, a company that Microsoft bought. So the surprising part here is NVIDIA obviously is the largest chip company, accelerator company, looking to move into the software stack. I would have expected a Microsoft looking to buy a hugging face, you know, or somebody that is operating in that layer. And look, I think what NVIDIA is signaling is not, they're just not content to be that chip provider. They are partnering with NeoClouds to, you know, provide the compute infrastructure. And now with the software layer, you know, buying hugging face, they want to cover all the adjacencies because they expect down the line, three to four years down the line, everyone is developing their own chips, all the hyperscalers, even the Frontier Labs, OpenAI.

23:59So they want to make sure that NVIDIA is still that layer, like the company that everyone standardizes on. Like Intel back in the day. I mean, Intel was the standard when it comes to PCs. And they had a lot of software components to their CPU strategy. I think that's what NVIDIA is after. They want to move up the stack. I wouldn't be surprised if they buy a security company, given all the focus on cybersecurity. Stay with us. More from Bloomberg Intelligence coming up after this.

24:57that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro plans. What if you could have more wins, more support, more sound effects? At LPL Financial, we like the sound of that because LPL offers more. Advisors, what if you could have more ways to help your clients? Ready to invest? What if you could find an advisor that really understands you? When it comes to your finances, your business, your future, at LPL, we ask, what if you could?

25:38Paid advertisement. Investing involves risk, including potential loss of principal. LPL Financial LLC. Member FINRA SIPC. You already know how AI is changing how everyday work gets done, how much ground you can cover, and how fast a team can scale. To stay ahead, you need the tools that give you a competitive advantage, built for this new era. Welcome to Agentic Revenue. Adio is the CRM for this world. It meets you where you work, compounds every customer signal into context, then acts on it across your pipeline to let you move at unmatched speed and scale. With agents and automations for every job in revenue, Adio orchestrates your work around the clock.

26:13Built to handle the scale of your workloads, extensible with API and MCP, and with the infrastructure to keep up with your most ambitious agents. Loved by high-growth startups like Granola, modal, and etched. Adio runs the work behind every win. That's Adio, the agentic CRM, the intelligent system that never sleeps. Picks up leads at 2 a.m., catches renewals before they slip, hands you the answer before you ask. Try Adio free at adio.com slash iHeart. That's adio.com slash iHeart.