After a preliminary political agreement between the authorities in Venezuela and the opposition, the United States gave a license to “Chevron” to expand its production in the country, which has about 300 billion barrels of oil reserves – the largest in the world. The energy giant will also be able to deliver crude oil from the South American country to the United States.
This comes just days before the entry into force of a partial EU oil embargo on Russian oil and at a ceiling price from oil-buying countries on both sides of the Atlantic.
The government and the opposition promised at their meeting in Mexico to seek a way out of the prolonged political crisis in Venezuela. The two countries issued a joint statement demanding that billions of state dollars in the West be unfrozen to help social projects.
Next year will mark 10 years since Nicolás Maduro’s electoral victory in the presidential vote and the subsequent strengthening of his authoritarian regime and persecution of the opposition, which has led to international sanctions. A series of meetings like the current one did not lead to a result, and the last one was a year ago.
But now, with the mediation of Norway, an agreement has been prepared for gradual access to the Venezuelan billions, which, through a fund managed by the United Nations, will go to health care, education, and food aid.
Washington said that the two countries are moving in the right direction and allowed Chevron to partially resume operations. It remains to be seen whether there will be an understanding of one of the main issues – the presidential elections in 2024. Maduro wants full recognition from the US and the EU of his regime that came to power and stabilized with the help of PDVSA, Russia, and Iran. and the opposition calls for free elections.
The decision for Chevron limits any cash payments to Venezuela, which could reduce oil available for export.
The licensing terms are designed to prevent state oil firm Petróleos de Venezuela, known as PDVSA, from receiving revenue from Chevron’s oil sales, U.S. officials said, quoted by Reuters. The license is valid for six months and will automatically renew monthly thereafter, the U.S. Treasury Department said.
The US permits “bring additional transparency to Venezuela’s oil sector” and allow Chevron to benefit from sales of “oil currently being produced” by its joint ventures with PDVSA, the California-based company said in a statement.
Following Venezuela’s oil sanctions in 2019, Chevron was granted an exemption to trade its Venezuelan crude to pay off outstanding debts. But these privileges were suspended a year later. Previously, Chevron’s four joint ventures with PDVSA produced about 200,000 barrels per day and exported the crude around the world.
The terms bar Chevron from helping the OPEC member develop new oil fields, but provide a way for the company to recoup some of the billions of dollars owed by PDVSA through oil sales. The license also allows the US company to import certain grades of oil into Venezuela to help refine Venezuelan oil.
Oilfield services firms Baker Hughes, Halliburton, Schlumberger, and Weatherford International have renewed their licenses in the U.S. but do not yet have a permit for new operations. This limits any major expansion of Venezuela’s oil production.
The United States, which first imposed sanctions on PDVSA in 2017, has said it reserves the right to cancel or revoke the license at any time. A spokesman insisted the permit was not a response to this year’s sharp rise in energy prices.
“This action reflects longstanding U.S. policy to provide targeted sanctions relief based on concrete steps that alleviate the suffering of the Venezuelan people and support the restoration of democracy,” the U.S. Treasury Department said in a statement.
Chevron is prohibited from conducting transactions with Russian-controlled companies operating in Venezuela. The terms will “require significant reporting from Chevron on the financial operations of their joint ventures to ensure transparency,” a US official told Reuters, adding that other sanctions against Venezuela and its employees remain in place.
“There’s not much incentive in the short term” for Venezuela, said Francisco Monaldi, an expert on Latin American energy policy at Rice University’s Baker Institute for Public Policy. Conditions could be eased over time, he added. “We will see how the Maduro government reacts to this and how many shipments will be awarded to Chevron after that,” Monaldi said.