US Lifts Sanctions And Grants Oil Firms License for Venezuela
The Trump administration has issued a general license that expands the operational capabilities of oil companies in Venezuela, representing a notable advancement in the effort to alleviate sanctions under the newly supported US leadership in Caracas. The license issued by the US Treasury Department on Thursday encompasses a range of activities that may facilitate the movement of Venezuelan crude. This includes exporting, selling, storing, and refining the oil, provided that these operations are conducted by a US entity. An administration official stated that it does not encompass upstream crude production within the country, where currently only one US oil company — Chevron Corp — operates under a special US license. The authorisation follows the approval of a historic reform of Venezuela’s hydrocarbons policy by lawmakers, which certain US oil executives have characterized as crucial for initiating operations in the region. President Donald Trump has stated his expectation that US energy companies will invest billions in revitalizing the nation’s oil sector, which has suffered from deteriorating infrastructure due to years of underinvestment and corruption.
The action demonstrates the White House’s intent to swiftly revitalize Venezuela’s economy following the US capture of former President Nicolás Maduro, according to a source. However, the overall effect of the change may be constrained due to limitations inherent in the license, such as a ban on dealings with entities linked to China. Before Maduro’s capture, China was a significant purchaser of sanctioned — and consequently heavily discounted — Venezuelan crude. “This looks like the first obvious and needed step to pave the way for energy companies to do business in Venezuela,” said Clayton Seigle. “It essentially removes the ban on collaborating with” Petroleos de Venezuela SA, the nation’s state oil enterprise, to manage the country’s crude, he stated. Nonetheless, payments to PDVSA must still “go through US-controlled accounts, and working with Chinese-controlled Venezuelan ventures is off limits,” Seigle stated. The license further stipulates that contracts are governed by US laws, and any disputes arising from them must be resolved within the United States.
The Treasury Department is mandating a “detailed report” on transactions involving the sale or transfer of Venezuelan oil to other nations — a measure that could serve as a further deterrent. The license encompasses various downstream operations, such as loading oil onto tankers, along with the exporting, transporting, and refining of that crude — provided these activities are conducted by “an established US entity.” It also authorizes “commercially reasonable” payments in the form of physical swaps of crude oil, diluents or refined petroleum products. The authorization of oil swaps holds significant importance for Spain’s Repsol SA and Italy’s Eni SpA, as both companies have previously utilized these exchanges to recoup payments from PDVSA for the gas they produce at an offshore field. “Even where the general license rules out some transactions, they could still be approved on a case-by-case basis later,” Kevin Book said in a note. “That could be a pathway for targeted authorisations of oil production by US companies as well as, potentially, crude sales to China,” he said. Trump and Secretary of State Marco Rubio have previously stated, “China would be permitted to buy Venezuelan crude.”
The Trump administration intends to maintain indefinite control over future sales of Venezuelan oil, with plans to retain the proceeds in US accounts. Trading giants Vitol Group and Trafigura Group have commenced the sale of Venezuelan crude that had been stranded in storage due to the US blockade initiated in the weeks prior to Maduro’s capture. Trump has claimed that the oil sales will be advantageous for both the US and Venezuela. At a Cabinet meeting on Thursday, Trump stated that oil companies will “be bringing back tremendous wealth for Venezuela and for the United States. And the oil companies will do fine, too. Venezuela will actually make for themselves more money than they’ve ever made before, and that’s a good thing.” Venezuelan Acting President Delcy Rodriguez has been engaging with foreign oil companies, presenting them with proposals for more favorable fiscal terms, reduced bureaucratic obstacles, and permitting the private sector to take charge of significant portions of the country’s vital industry.
