- US ready to allow oil giant to produce and sell Venezuelan oil
- Chevron owes billions in unpaid debt to state-owned PDVSA
- US aims to transfer Venezuelan oil sales from shadow companies
HOUSTON, Nov 23 (Reuters) – Chevron Corp could soon win U.S. approval to expand operations in Venezuela and resume trading in its oil once the Venezuelan government and its opposition resume political talks, officials said on Wednesday. four people familiar with the case.
A U.S. clearance for Chevron to help rebuild the country’s dwindling oil production has been one of the biggest draws in sparking talks between the Venezuelan government and its opposition.
This year, US officials sought to facilitate a return to negotiations between socialist President Nicolas Maduro and the country’s opposition by offering a slight easing of sanctions and releasing some Venezuelans imprisoned in the United States.
Venezuelan parties and US officials are pushing to hold talks in Mexico City this weekend, the people said, the first since October 2021. Maduro has gained influence this year with newly elected leftist leaders in Brazil and Colombia and weakened opposition support.
Chevron declined to comment on the pending approval or terms. U.S. Oil Company No. 2 remains in compliance with the terms of its existing license, a spokesperson said. A license authorizing maintenance operations expires on December 1st.
Conditions prepared for approval will prevent Venezuela’s state-owned oil company PDVSA from receiving proceeds from Chevron’s oil sales. And they will reduce “reliance on corrupt shadow companies that control the flow of Venezuelan oil to countries like China,” said a person familiar with the matter in Washington.
White House officials aim to “shift oil sales from illicit and non-transparent channels to transparent and legitimate channels,” the person said. The United States could revoke the clearances if the Maduro administration failed to negotiate in good faith or meet its commitments, the person said.
“We have long made clear our commitment to providing targeted assistance based on concrete actions that alleviate the suffering of the Venezuelan people and bring them closer to a restoration of democracy,” a US State Department spokesperson said. .
US President Joe Biden’s administration has reason to grant Chevron a broader operating license as US shale production gains slow, Russia’s oil exports shrink under sanctions and the Saudi Arabia signaling possible OPEC production cuts.
This year, the United States prevented oil prices from skyrocketing by releasing more than 200 million barrels from the country’s emergency oil reserves. But these releases are due to end soon.
The Biden administration had signaled that any easing of sanctions against Venezuela, including granting Chevron a broad license to restart oil production and regain business privileges in Venezuela, would only come if both sides made progress. in political talks.
The US Treasury could issue a new license on Monday or Tuesday. Expanded mandates would not be a response to concerns over energy prices, but would reflect a desire “to support the restoration of democracy in Venezuela,” one of the people said.
Chevron partners with PDVSA in several petroleum joint ventures that pump and process crude oil for export. Together, the companies had produced around 200,000 barrels per day (bpd) before US sanctions and lack of funding curtailed production.
PDVSA did not respond to requests for comment on the deliberations.
Following oil sanctions against Venezuela in 2019, Chevron was granted an exemption to trade its Venezuelan crude to recover billions of dollars in pending debt. Those privileges were suspended by President Donald Trump a year later as part of his “maximum pressure” strategy to oust Maduro, whose 2018 re-election was not recognized by the West.
The United States this year began considering Chevron’s request to expand operations with greater urgency as Washington seeks oil to replace supplies hit by sanctions on Russia as well as OPEC’s decision to reduce production.
In recent weeks, representatives of Maduro and the opposition have held talks in Paris under the auspices of the French, Colombian and Argentinian presidents to break the political deadlock.
In Washington, Republicans and some of Biden’s fellow Democrats have been skeptical. Maduro is ready to negotiate in good faith and opposes easing sanctions unless he gives something in return.
A growing number of oil companies are exiting joint ventures with PDVSA due to growing debt and frozen operations. The contraction positions Chevron as the only strong partner that could revive production, which is expected to fall this year to around 650,000 bpd, below the official target of 2 million bpd.
Venezuela holds around 300 billion barrels of oil reserves, the largest in the world, but has been unable to meet its production targets due to underinvestment, poor maintenance, lack of supplies and US sanctions.
(This story has been refiled to add the missing word “cut” in paragraph 6.)
Reporting by Marianna Parraga in Houston; Additional reporting by Sabrina Valle, Matt Spetalnick and Vivian Sequera; Editing by Gary McWilliams and Josie Kao
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