A sign is posted in front of a Chevron gas station on July 31, 2020 in Novato, California.
Justin Sullivan | beautiful pictures
letter V on Saturday received an expanded U.S. license allowing the second-largest U.S. oil company to resume production in Venezuela and import the South American nation’s crude into the United States.
The decision allows Chevron to revive existing oil projects in the US-sanctioned country and bring new oil supplies to US refineries. However, it restricts cash payments to Venezuela, which could reduce the oil supply to Chevron.
The license terms are designed to prevent Venezuelan state oil company PDVSA from receiving proceeds from Chevron’s gasoline sales in Venezuela, US officials said. The license lasts for six months and will be automatically renewed monthly thereafter, according to the US Treasury Department.
A Chevron spokesperson said the company is reviewing the licensing terms and declined to immediately comment.
The United States issued the license on the same day Venezuela and opposition leaders began political dialogue in Mexico City by agreeing to ask the United Nations to oversee a fund to help provide food, health care. and infrastructure for Venezuelans.
The provisions banning Chevron help the OPEC member develop new oil fields but provide a way for the company to recoup some of the billions of dollars PDVSA owes through oil sales. The US says it reserves the right to cancel or revoke the license at any time.
“This action reflects the longstanding policy of the United States to provide targeted sanctions based on concrete steps to alleviate the suffering of the Venezuelan people and aid in the restoration of democracy.” The US Treasury Department said in a statement.
The licensing could provide a limited supply of new crude to a market that is currently struggling to replace Russian barrels shunned by Western buyers because of the invasion of Ukraine. Chevron and other U.S. refiners could benefit from Venezuela’s supply of heavy crude to their U.S. Gulf Coast processing plants.
Analysts warn that Venezuelan President Nicolas Maduro could be angered by restrictions contained in the license, including the lack of cash payments sought by his administration. Proceeds from Chevron’s oil sales in Venezuela will go to the humanitarian fund rather than to PDVSA.
A US official said the terms would “require to make sense”, adding other sanctions against Venezuela and its officials would remain in place.
“There is no big short-term momentum” for Venezuela, said Francisco Monaldi, an expert on Latin American energy policy at Rice University’s Baker Institute for Public Policy. Terms could be eased over time depending on the progress of the Mexico City negotiations.
“We’ll see how Maduro’s government reacts to it and how much cargo will be delivered to Chevron after that,” Monaldi said.
