By Timothy Gardner
The US eased sanctions on Venezuela’s energy sector on Friday, issuing two general licences that allow global energy companies to operate oil and gas projects in the OPEC member and for other companies to negotiate contracts to bring in fresh investments.
The move was the most significant relaxation of sanctions on Venezuela since US forces captured and removed President Nicolas Maduro last month.
The Treasury department’s Office of Foreign Assets Control issued a general licence allowing Chevron, BP, Eni, Shell and Repsol to operate oil and gas operations in Venezuela. Those companies still have offices in the country and stakes in projects, and are among the main partners of state-run company PDVSA.
The authorisation for the oil majors’ operations requires payments for royalties and Venezuelan taxes to go through the US-controlled Foreign Government Deposit Fund.
The other licence allows companies around the world to enter contracts with PDVSA for new investments in Venezuelan oil and gas. The contracts are contingent on separate permits from OFAC.
The authorisation does not allow transactions with companies in Russia, Iran, or China or entities owned or controlled by joint ventures with people in those countries.
The licences “invite American and other aligned companies to play a constructive role in supporting economic recovery and responsible investment, ” the US state department said in a release. Additional authorisations may be issued “as necessary”, it said.
A spokesperson for Chevron, the only US oil firm currently operating in Venezuela, said the company welcomed the new licences.
“The new General Licences, coupled with recent changes in Venezuela’s Hydrocarbons Law, are important steps toward enabling the further development of Venezuela’s resources for its people and for advancing regional energy security,” the spokesperson said in a statement.
Eni said it is assessing the opportunities in Venezuela that the authorisation opens up.
OIL LAW REFORM
The US licences follow a sweeping reform of Venezuela’s main oil law approved last month, which grants autonomy for foreign oil and gas producers to operate, export and cash sale proceeds under existing joint ventures with PDVSA or through a new production-sharing contract model.
The US has had sanctions on Venezuela since 2019 when President Donald Trump imposed them during his first administration.
Trump is seeking $100bn in investments by energy companies in Venezuela’s oil and gas sector. US energy secretary Chris Wright said on Thursday in Venezuela that oil sales from the country since Maduro’s capture have hit $1bn and would hit another $5bn in months.
Wright said the US will control the proceeds from the sales until Venezuela stands up a “representative government”.
CONCERN ABOUT FUNDS ROUTED THROUGH QATAR
The US is routing proceeds of the oil sales through a fund in Qatar, before being sent to the interim Venezuelan government, a move that has raised some concerns.
US Representative Gregory Meeks, the top Democrat on the House foreign affairs committee, wrote a letter to secretary of state Marco Rubio on Friday, questioning the legal basis of the arrangement, and warning it could enable corruption, skirt accountability, and shield assets from legitimate creditors seeking legal recourse against what is left of the Maduro regime.
The state department did not immediately respond to a request for comment.
Since last month, the Treasury issued several other general licences to facilitate oil exports, storage, imports and sales from Venezuela. It also authorised the provision of US goods, technology, software or services for the exploration, development or production of oil and gas in Venezuela.
The Venezuelan government expropriated assets of Exxon Mobil and ConocoPhillips in 2007 under then-president Hugo Chavez. The Trump administration is trying to get those companies to invest in Venezuela as well. At a meeting at the White House with Trump last month, Exxon Mobil CEO Darren Woods said Venezuela was “uninvestable” at the moment.
Wright said on Thursday that Exxon, which no longer has an office in Venezuela, is in talks with the government there and gathering data about the oil sector. Exxon did not immediately comment.
Reuters
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