The US Treasury Department has authorized Chevron Corp. to resume limited oil production in Venezuela while the Biden administration maintains sanctions against trade with that state’s national oil company, Petroleos de Venezuela SA (PDVSA).
Treasury’s Office of Foreign Assets Control (OFAC) issued a license Nov. 26 to Chevron approving production in Venezuela and export of petroleum and petroleum products to the United States—and only to the United States.
“This authorization prevents PDVSA from receiving profits from the oil sales by Chevron,” Treasury said in its announcement of the change.
Chevron’s four onshore operations in Venezuela are through joint ventures with PDVSA affiliates, which are the majority partners. The OFAC license says it approves the Chevron exports from Venezuela “provided that the petroleum and petroleum products produced by the Chevron JVs are first sold to Chevron.”
In addition, the license says it does not authorize the payment of any taxes or royalties to the Venezuelan government, and it does not authorize the payment of any kind of dividend to PDVSA or to any entity in which PDVSA owns, directly or indirectly, a 50% or greater interest.
Chevron responded with a statement of commitment to operating “in compliance with the framework provided.”
The OFAC license “means Chevron can now commercialize the oil that is currently being produced from the company’s Joint Venture assets,” Chevron said. “We are determined to remain a constructive presence in the country and to continue supporting social investment programs aimed at providing humanitarian relief.”
Progress cited
The Biden administration’s decision came after the Venezuelan government, under President Nicolas Maduro, announced a set of steps, including a humanitarian agreement focused on education, health, food security, flood response, and electricity programs to benefit the Venezuelan people, and an agreement on the continuation of talks with leaders of the political opposition, talks being held in Mexico City focused on 2024 elections in Venezuela.
Treasury said the authorization for Chevron “reflects longstanding US policy to provide targeted sanctions relief based on concrete steps that alleviate the suffering of the Venezuelan people and support the restoration of democracy.”
US sanctions on Venezuela for more than 15 years have targeted the Venezuelan government and individuals because of what are judged to be antidemocratic actions and a variety of other problems, including involvement in drug trafficking and a failure to fully cooperate in antiterrorism efforts.
In 2019, President Trump issued Executive Order 13884, which among other things authorized financial sanctions on foreign energy companies working with PDVSA. Exports of Venezuelan crude oil and petroleum products ended in June 2019, according to the Energy Information Administration. Numerous other Western and Latin American countries imposed sanctions on Venezuela in 2020.
Venezuela’s crude oil production averaged 636,000 b/d in 2021, of which 448,000 b/d was exported, according to the Organization for the Petroleum Exporting Countries. Market reports in 2022 have at times cited higher production.
