Caracas, September 4, 2022 (venezuelanalysis.com) – US oil giant Chevron has reportedly applied for a broader license for its Venezuela operations.
With the Venezuelan economy and the oil sector in particular under heavy unilateral sanctions from the US Treasury Department, all activities involving the Caribbean nation require special permission from Washington.
Chevron has a minimal license that runs out in November, allowing the company to perform maintenance on its wells but not drill, process or trade in Venezuelan crude. The company was forced to wind down its operations in 2020.
According to Reuters, the California-based corporation is looking for an expanded sanctions waiver that will see it take greater control in joint ventures with Venezuelan state oil company PDVSA as well as ramp up production and resume sales of Venezuelan crude.
In May, Chevron received permission to hold direct talks with PDVSA on kickstarting its activities. The two companies co-own four ventures with a total crude production capacity of about 200,000 barrels per day (bpd).
Reuters claimed that the multinational oil firm is pushing for a crude-for-diluents swap that will boost production at the Petropiar crude upgrader. It also wants greater control over the ventures’ operations, human resources and oil trading while using sales to offset a reported $3 billion owed by PDVSA.
The revamped operations would not involve changing the stakeholding structure at the joint enterprises. Chevron has between 25 and 40 percent shares in its Venezuela ventures, while the country’s legislation demands that PDVSA be the majority shareholder in all oil projects.
For its part, Caracas has stated that “the ball is in the US’ court” concerning an expansion of Chevron’s activities.
“We are ready. We have discussed and agreed with them everything related to the immediate restitution of operations. But it no longer depends on us,” Venezuelan Oil Minister Tareck El Aissami said in a press conference.
Since 2017, Washington has levied a string of measures against the Venezuelan oil sector, including financial sanctions, an oil embargo and secondary sanctions. The US Treasury Department also blocked swap agreements while targeting and threatening international agents against dealing with the South American country.
The wide-reaching sanctions triggered a collapse of the country’s oil output, which went from 1.9 million bpd before the 2017 measures all the way down to historic lows under 400,000 bpd in the second half of 2020. Production bounced back but has been stuck around 700,000 bpd for several months.
Both the Trump and Biden administrations have ignored widespread condemnation of the economic blockade. Multilateral organizations, UN human rights rapporteurs, solidarity groups and even US Democrat House members have called on the White House to undo the measures that have been classed as “collective punishment.”
However, the global energy crisis triggered by the conflict in Ukraine saw Biden reengage with the Maduro administration.
Administration officials have claimed Washington is looking to encourage the Venezuelan government to re-open talks with the hardline opposition. While there has been little movement in that direction, the US Treasury Department granted oil-for-debt licenses to Italy’s ENI and Spain’s Repsol in a bid to help European allies tackle fuel shortages and rising costs.
The two corporations carried several cargoes in June and July before shipments were reportedly suspended as PDVSA looks to expand the swaps and receive fuel as well.