Exclusive Chevron to trade Venezuelan oil if US eases sanctions – sources

FILE PHOTO: Chevron's logo is seen at the company's Caracas office
FILE PHOTO: Chevron’s logo is seen at the company’s office in Caracas, Venezuela on April 25, 2018. REUTERS/Marco Bello/File Photo

March 14, 2022

By Marianna Parraga and Matt Spetalnick

HOUSTON/WASHINGTON (Reuters) – Chevron Corp. is preparing to take operational control of its joint ventures in Venezuela if Washington eases sanctions on Caracas to boost crude oil supplies after it banned Russia’s oil imports, according to three people familiar with the situation.

The US oil major has begun assembling a trading team to market oil from Venezuela, two of the people said. If US approvals arrive, Chevron aims to expand its role in the four joint ventures it shares with state-owned PDVSA, they added.

Chevron has asked the U.S. government for a license broad enough to have a greater say in its joint ventures in Venezuela, a first step toward recovering crude oil production and exports, and to control where the oil is sent said the three people. Since 2020, Chevron has delegated most decisions to the state PDVSA.

However, US officials have made it clear that any new approval will depend on Venezuelan President Nicolas Maduro taking further political steps, two sources said, such as releasing more imprisoned Americans and setting a firm date for the resumption of negotiations with the Venezuelan Opposition.

Chevron’s proposed moves could revive Venezuela’s oil production and exports after years of underinvestment and sanctions caused them to shrink from 2.3 million barrels per day (bpd) last month to about 755,000 barrels per day (bpd) in 2016. Chevron’s joint ventures with PDVSA had produced about 200,000 bpd prior to US sanctions and lack of funding reduced their production.


A date for granting the power of attorney has not been set. But Chevron has begun preparations for employees to obtain Venezuelan visas in Aruba, ready to travel to Caracas when the US Treasury Department eases restrictions, people said.

Last week US President Joe Biden banned US imports of Russian oil and added a series of sanctions after Russia invaded Ukraine, an action Moscow has described as a “special military operation”.

Chevron intends to begin shipping Venezuelan oil to refineries as early as next month. Last week’s US ban on Russian imports allows oil under existing contracts to enter the country until April 22.

“Since 2019, when Venezuelan casks were banned in the United States and Colombia and Mexico reduced key exports to the United States, Russian casks have been feeding Gulf refineries,” said a person involved in the talks.

Chevron had greatly reduced its presence in Venezuela after Washington tightened sanctions on Venezuela in 2020. For years, Chevron and other PDVSA venture partners have called for greater operational oversight.

The United States is drafting a new license that would allow Chevron to take a more active role in Venezuela, a person familiar with the matter said. Washington is considering similar oil-for-debt approvals for Spain’s Repsol and Italy’s Eni SpA. They are collectively owed billions of dollars by their Venezuelan joint ventures.

Chevron declined to comment, but reiterated in a statement that its operations in Venezuela comply with US sanctions and remain “a constructive presence in Venezuela.”

PDVSA and the Venezuelan Oil Ministry did not respond to requests for comment.

A State Department spokesman said the US administration “does not anticipate sanctions measures,” but added, “We have made it clear that we would review some sanctions policies if the Venezuelan parties make significant progress in Venezuela-led negotiations in Mexico toward.” of a democratic solution. ”

The US Treasury Department did not immediately respond to a request for comment.


That month, Washington quietly resumed diplomatic ties with Venezuela, a close ally of Russia. Last week, Maduro released two imprisoned Americans, and Washington has insisted others be released as well. Maduro has expressed his willingness to resume dialogue with the opposition after suspending talks in Mexico in October. US officials want a firm commitment to discuss free elections.

On Sunday, US National Security Advisor Jake Sullivan told NBC that any lifting of sanctions on Venezuela must be tied to “concrete steps” by Maduro.

The Biden administration had not previously made Venezuela a foreign policy priority. That changed when Middle Eastern and US shale producers failed to stockpile crude oil stocks when the White House urged them to do so following the invasion of Ukraine.

Republicans in Congress and even some of Biden’s Democrats, such as US Senator Bob Menendez, have opposed any deal that would benefit the socialist president. Washington condemned Maduro’s 2018 re-election as a sham.

The United States imported 670,000 barrels per day (bpd) of Russian oil and fuel last year. One of the few countries that can replace these imports is Venezuela. Before the sanctions, its oil mostly went to refineries on the US Gulf Coast.


Barrels marketed by Chevron could help PBF Energy, Valero Energy and Phillips 66 fill their supply gap, the source said. All have operations dedicated to heavy fuel oil operations.

Chevron has been in parallel discussions with PDVSA to expand leadership of its joint ventures. Any arrangements would likely be temporary unless Venezuela enacts sweeping reforms to its oil legislation that requires PDVSA to be the controlling shareholder in any joint venture.

While PDVSA President Asdrubal Chavez supports an expanded operational role for Chevron, some top Venezuelan officials oppose the change, three sources familiar with the matter said.

Venezuela has about 300 billion barrels of oil reserves, the largest in the world, but has failed to meet its production targets due to underinvestment, poor maintenance, lack of supplies and US sanctions.

(Reporting by Marianna Parraga in Houston and Matt Spetalnick in Washington; Editing by Gary McWilliams and David Gregorio) Exclusive Chevron to trade Venezuelan oil if US eases sanctions – sources


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