July 31, 2020 in Novato, California, a sign is in front of a Chevron gas station.
Justin Sullivan | Getty Images
Chevron received an expanded U.S. license on Saturday that will allow the second-largest U.S. oil company to resume production in Venezuela and import the South American country’s crude into the United States.
The decision allows Chevron to revive existing oil projects in the US-sanctioned country and deliver new oil supplies to refineries across the United States. However, it limits cash payments to Venezuela, which could reduce the amount of oil available to Chevron.
License terms are designed to prevent the Venezuelan state-run oil company PDVSA from receiving proceeds from Chevron’s Venezuelan petroleum sales, US officials said. The license lasts for six months and then automatically renews monthly after that, according to the U.S. Treasury Department.
A Chevron spokesperson said the company was reviewing licensing terms and declined to comment immediately.
The US issued the license on the same day Venezuela and opposition leaders began a political dialogue in Mexico City by agreeing to ask the United Nations to oversee a fund to help provide food, health care and infrastructure to Venezuelans .
Terms keep Chevron from helping the OPEC member develop new oil fields, but offer the company a way to recoup some of the billions of dollars owed by PDVSA through oil sales. The United States said it reserved the right to revoke or revoke the license at any time.
“This action reflects the long-standing U.S. policy of providing targeted relief from sanctions based on concrete steps that alleviate the suffering of the Venezuelan people and support the restoration of democracy,” the U.S. Treasury Department said in a statement. declaration.
The license could provide limited new crude supplies in a market now struggling to replace Russian barrels shunned by Western buyers due to the invasion of Ukraine. Chevron and other US oil refiners could benefit from supplies of heavy crude oil from Venezuela flowing to their processing plants on the US Gulf Coast.
Analysts warned Venezuelan President Nicolas Maduro is likely to grow angry over the restrictions included in the permit, including the lack of cash payments his government has been asking for. Proceeds from Chevron’s oil sales to Venezuela would go to a humanitarian fund instead of PDVSA.
The conditions will be “significantly demanding,” a US official said, adding that other sanctions against Venezuela and its officials remain in place.
“There is no major near-term stimulus” for Venezuela, said Francisco Monaldi, an expert on Latin American energy policy at Rice University’s Baker Institute for Public Policy. The terms may be relaxed over time depending on how talks go in Mexico City.
“We will see how Maduro’s government reacts to it and how many cargoes will be allocated to Chevron after that,” Monaldi said.