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The Subversive Truth: We Shouldn’t Sell Oil to the United States

VA's Andreína Chávez argues that sovereignty involves some tough choices, including in oil dealings with Chevron and the US.
oil chevron
Latest edition of "The Subversive Truth" column.

In Venezuela, there is a popular saying that goes, ‘A turtle can’t climb a tree and an armadillo doesn’t shave,’ which is used to describe something impossible to change or achieve, or when someone refuses to see reality as it is. 

This clever expression has provided me with clarity on a long-standing internal conflict: Venezuela should not resume selling oil to the United States after US sanctions devastated our oil industry and our livelihoods in the name of regime change. Is this a crazy idea, or is it the logical, if difficult, choice towards true liberation?

In other words, should the Maduro government allow the commercialization of Venezuelan oil by corporations of the aggressor country and continue to bind our economy to the whims of Washington’s foreign policy goals? I think the answer is simple: Choose the path free of extorsion.

Surely we remember the context: In 2017, Washington imposed financial sanctions against Venezuelan state oil company PDVSA, an export embargo in 2019 and secondary sanctions in 2020, forbidding, directly or indirectly, both US and non-US companies from doing business with Caracas. Oil production and sales plummeted and the industry has deteriorated so much that nobody can predict when, if or when we’ll be able to recover our most important source of revenue. The human toll was devastating, and despite some modest improvements, the Venezuelan economy remains deeply wounded. 

Then the Russia-Ukraine conflict began in February 2022, Washington banned Russian energy imports and left Europe scrambling for suppliers. In May and November of that year, the US Treasury Department authorized Spain’s Repsol, Italy’s Eni and US oil giant Chevron to resume limited operations in Venezuela, mostly via crude-for-debt swap deals.

Fast forward to October 2023 and the US Treasury issued a six-month license (it expires in April 2024) allowing production, investment and sales in the Venezuelan oil and gas sectors after an “electoral deal” signed between Caracas and the US-backed opposition.

But every deal with the devil has a catch: Washington will “decide” if our 2024 presidential elections, before and after they are held, are democratic enough. This means that if Maduro, or anyone who is not a US puppet, wins the vote we can expect another round of collective punishment for choosing “wrong.” 

It is important to understand that presidential elections were set for 2024 regardless, so the “electoral deal” might as well say that we have to breathe next year. Still, Washington needed some way to keep blackmailing us and an excuse to cover its true reasons for temporarily lifting sanctions, which have never had anything to do with democracy.

Contrary to popular belief, Washington was also not desperate for Venezuelan oil. While the US was the top purchaser of Venezuela’s heavy crude until 2018 with 500,00 barrels per day, the country was only the fourth largest US oil supplier. Other countries that produce heavy crude quickly filled the gap left after 2018. 

What led to the easing of sanctions? European nations needed alternative energy sources, oil markets needed “calming,” while Chevron was eager to recover its outstanding debt of US $3-5 billion owed by PDVSA and safeguard its century-old investment in Venezuela.

Chevron has had a presence in Venezuela since 1923, with four joint ventures capable of producing 200,000 barrels per day. Many US refineries were specifically designed to process Venezuela’s heavy crude blends. Consequently, the US Treasury mandated that the company’s shipments must be sent to the US, and a significant portion of oil revenues must be used to offset PDVSA’s debt. Essentially, this is about ensuring Chevron gets a way better deal than it would be entitled to as a minority partner in those joint ventures.

Has Venezuela seen any benefits from these developments? Yes, there have been some gains. PDVSA has managed to modestly increase its production to 780,000 barrels per day. Additionally, Caracas has expanded its swap deals with Eni, Repsol, and Chevron to receive fuel and diluents. PDVSA is also now able, in theory, to process payments more easily, offer its crude at higher prices (after years of being forced to offer discounts), import materials to repair refineries, and establish new partnerships.

Is this enough to subject ourselves to Washington’s newest extortion method? The answer is no. Next year, we might witness macroeconomic improvements in Venezuela, which the political class will likely seize upon to rally their electoral base. However, if sanctions are reinstated – a scenario that seems very likely come the 2024 electoral results – the burden will once again fall heavily on working-class people. And with a convenient excuse.

Adding insult to injury, Chevron has just completed a deal to purchase Hess Corporation for $53 billion. This acquisition gives Chevron a 30 percent stake in the ExxonMobil-operated Stabroek Block, which holds substantial offshore oil reserves discovered in 2015. The oil development is situated in the disputed waters of the Essequibo Strip, controlled by Guyana but subject to a territorial controversy with Venezuela. The discovery of oil in this area has heightened tensions between the two countries, leading to threats of US military intervention. Direct talks between the two governments with regional mediation saw the situation calm down.

The Stabroek Block is producing around 380,000 barrels per day, with plans to increase output to 600,000 bpd by early 2024. The United States has already established itself as a key importer of Guyanese oil and Chevron CFO Pierre Breber said the company expects “long-term cash generation” and massive returns for shareholders.

As Venezuela and Guyana fight against each other, it is multinational corporations that will reap the greatest benefits. And as Venezuela denounces that Guyana only serves Exxon’s interests, the Maduro government is boasting about a Chevron deal under not very anti-imperialist terms.

One could argue that Venezuela’s situation differs from that of Guyana due to PDVSA’s majority stake in joint ventures and the country’s hydrocarbon legislation. But that was before sanctions. Right now, Chevron operates under a very favorable license that strictly aligns with US interests, leaving Venezuela with little choice but to accept what is offered, all the while facing the looming threat of even more severe sanctions in the future.

A real win would be the return of oil subsidiary CITGO to Venezuela. The US-based refiner, seized in 2019 by the former Trump administration, is valued at $10-$13 billion and used to generate up to $1 billion in revenues and provide a vital supply of fuel to meet national demand. Its role in Venezuela’s economy was crucial.

But the prospects are grim. Currently, CITGO is undergoing auction proceedings overseen by a Delaware judge to settle claims totaling more than $23 billion against Venezuela from various corporations, including a small one from ExxonMobil. 

Washington will never, not in a million years, return this golden goose, which is why allowing Chevron to take Venezuelan crude while we watch a US court dismantle CITGO to appease vindictive corporations is akin to giving Christmas presents to a burglar who gained entry to your home using the keys you provided.

Without CITGO, all we can hope for is placing some 175,000-200,000 barrels of oil per day in the US market with deals devised mostly for debt repayment and signed under extortion. On the other hand, Venezuela could continue boosting crude exports to Asia and push for non-US dollar deals that are not subject to Washington’s blackmail.

I understand that the situation is more complex than just making a different decision. For example, only China’s independent refiners have continued to purchase Venezuelan crude in recent years while major players like the China National Petroleum Corporation (CNPC) and Indian companies have largely refrained from buying Venezuelan oil to steer clear of US sanctions. 

It’s not an easy path, but in order to realize a multipolar, de-dollarized future, we must be prepared to make sacrifices and difficult choices.

Venezuela has already made significant strides in its slow oil sector recovery in recent years. Oil workers have acquired the skills to manufacture parts that were previously imported, and with assistance from Iran, they have successfully restored refineries to operational status. This has been a hard-won achievement that we must continue to pursue. 

Furthermore, with the Biden administration currently funding the genocide in Gaza, refraining from selling oil to US corporations becomes not only a strategic decision but also an ethical one.

The question arises: How can we denounce US imperialism and economic terrorism while still engaging in business with its agents? It is a complex dilemma, as the nature of the beast does not change, much like turtles will never climb trees or armadillos shave off their protective armor.

Andreína Chávez Alava was born in Maracaibo and studied journalism at the University of Zulia, graduating in 2012. She immediately started working as a writer and producer at a local radio station while also taking part in local and international solidarity struggles.

In 2014 she joined TeleSUR, where in six years she rose through the ranks to become editor-in-chief, overseeing news, analysis and multimedia content. Currently based in Caracas, she joined Venezuelanalysis in March 2021 as a writer and social media manager and is a member of Venezuelan artist collective Utopix. Her main interests are popular and feminist struggles.