Chevron Gets U.S. License to Pump Oil in Venezuela Again

WASHINGTON — The U.S. said it would allow Chevron. Corporation

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Oil from Venezuela’s oil fields continues after talks between President Nicolás Maduro’s government and an opposition coalition continue in Mexico City on efforts to implement a nearly $3 billion humanitarian aid program and hold free and fair elections. To resume pumping.

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After a deal brokered by Norway in Mexico City, the Biden administration granted Chevron a license that allows the California-based oil company to return to its oil fields in joint ventures with Venezuela’s national oil company Petróleos de Venezuela SA. . A new license granted by the Treasury Department allows Chevron to pump Venezuelan oil for the first time in years.

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Biden administration officials said the license prohibits PdVSA from profiting from Chevron’s oil sales. The U.S. is prepared to revoke or modify the license, which will be in effect for six months, if Venezuela does not negotiate in good faith, officials said.

Venezuela produces about 700,000 barrels of oil per day, up from more than 3 million in the 1990s.


Isaac Arrutia/Reuters

“If Maduro again tries to use these negotiations to buy time to further consolidate his criminal dictatorship,” said Sen. Robert Menendez (D., NJ), the United States and our international partners must The full force of the sanctions should be withdrawn.” Chairman of the Senate Foreign Relations Committee.

The shift in U.S. policy could prompt other oil companies to resume operations in Venezuela as part of a campaign of increased pressure after the Trump administration clamped down on the activities of Chevron and other companies there. But the government under the leadership of Mr. Maduro’s Treasury Department action did not specify how non-U.S. oil companies might reengage with Venezuela.

Venezuela produces about 700,000 barrels of oil per day, up from more than 3 million barrels in the 1990s. Some analysts say Venezuela could reach 1 million barrels a day in the medium term, a modest increase reflecting the dilapidated state of the country’s state-led oil industry.

Some Republican lawmakers criticized the Biden administration’s decision to clear the way for Chevron to pump more oil into Venezuela. “The Biden administration should allow US energy producers to start producing domestically instead of begging dictators for oil,” Rep. Claudia Tenney (R., N.Y.) wrote on Twitter.

Biden administration officials said the decision to issue the licenses was not a response to oil prices, which have been a major concern for President Biden and his top advisers in recent months as they try to deal with inflation. . “This is about the government taking the necessary steps to restore democracy in Venezuela,” one official said.

The Wall Street Journal reported in October that the Biden administration was preparing to ease sanctions on the Venezuelan government to allow Chevron to resume pumping oil there.

Jorge Rodríguez led the Venezuelan government delegation to the talks in Mexico City, where an agreement was signed.


Henry Romero/Reuters

Under the new license, profits from oil sales will go toward paying off millions of dollars in debt owed to Chevron by PdVSA, administration officials said. He said the US would require Chevron to report details of its financial operations to ensure transparency.

Chevron spokesman Ray Fuhr said the new license allows the company to commercialize oil currently being produced at its joint venture assets. He said that the company will run its business as per the existing framework.

The license prevents Chevron from paying taxes and royalties to the Venezuelan government, which surprised some experts. They were expecting the direct revenue to encourage PdVSA to reship oil cargoes away from obscure export channels, mostly at steep discounts to Chinese buyers, which Venezuela has relied on for years to circumvent sanctions. What is it.

“If that’s the case, Maduro doesn’t have significant incentives to allow many of Chevron’s cargoes to go out,” said Francisco Monaldi, director of the Latin America Energy Program at Rice University’s Baker Institute for Public Policy. He said that sending oil to China, even at a steep discount, would be better for Caracas than simply paying off the debt to Chevron.

The limited scope of the Chevron license is seen as a way to ensure that Mr. Maduro sticks to the negotiations. Luisa Palacios said, “Instead of fully opening up Venezuelan oil to immediately flow to the US market, what the license proposes is a path to normalization that could potentially hurt Maduro on the political and human rights fronts.” depends on incentives from the government,” said Luisa Palacios, senior research scholar at the Columbia University Center on Global Energy Policy.

The license allows Venezuelan oil to return to the U.S., historically its biggest market, but only if oil from the PdVSA-Chevron joint ventures is first sold to Chevron and those ventures “U.S. “Which appears to limit the sale of PdVSA’s portion to the U.S. market,” Mr. Monaldi said.

The license bans transactions in goods and services from Iran, a US oil producer that has helped Venezuela circumvent sanctions in recent years. It prevents dealings with Venezuelan entities owned or controlled by Western-sanctioned Russia, which has played a role in Venezuela’s oil industry.

Jorge Rodriguez, the head of Venezuela’s congress and head of the government delegation to the Mexico City talks, declined to comment on the issuance of the Chevron license.

Freddy Guevara, a member of the opposition coalition delegation, said $3 billion in frozen funds for humanitarian aid and infrastructure projects in Venezuela would be administered by the United Nations. He warned that the program would take time to fully implement. “It starts now, but the time period is up to three years,” he said.

Sanctions are expected to freeze Venezuelan state funds in banks abroad that could be used to ease the country’s health, food and power crises by building infrastructure for electricity and water treatment needs. will go. “Not one dollar will go into government coffers,” Mr. Guevara said.

Chevron plans to restore lost production as it carries out maintenance and other necessary work, but it will not attempt major work that would require new investment in the nation’s oil fields. until the $4.2 billion in debt is repaid. That could take about two to three years, depending on oil market conditions, according to people familiar with the matter.

PdVSA owes Chevron and other joint-venture partners more than two years’ worth of shares of oil revenue, one of the people said, following U.S. sanctions on the Venezuelan company to its partners in 2020. Payment was stopped. The license would allow Chevron to collect its share of profits from its joint ventures such as Petropier, in which Chevron has a 30 percent stake.

Analysts said the new deal raises expectations that will take time and work to meet. “Ensuring the success of the talks will not be easy, but it is clear that offering such gradual sanctions relief to incentivize agreements is the only way forward. The moment is here, but there’s still a lot of work to be done,” said Geoff Ramsey, Venezuela director in the Washington office for Latin America.

Write to Colin Eaton at [email protected] and Andrew Restuccia at [email protected]

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