Report: Repsol and Eni May Begin Limited Oil Exports From Venezuela

PDVSA file image

Published Jun 6, 2022 3:08 AM by The Maritime Executive

The United States government has agreed to allow two European energy companies with holdings in Venezuela to begin shipping cargoes to the EU as early as next month, multiple sources informed of the deal told Reuters. 

Eni, which has a presence in Venezuela's offshore oil sector, and Repsol, which has had an interest in Venezuela's onshore upstream sector since 1993, will soon be allowed to export a small quantity of the nation's crude to European markets without fear of sanctions. Venezuelan state oil company PDVSA has been under a strict (if often subverted) U.S. embargo since 2019, but the Biden administration has been in talks with the regime of Venezuelan leader Nicolas Maduro on options for easing the restrictions. 
As the West phases out consumption of Russian oil over the invasion of Ukraine, it desperately needs alternative supplies. Venezuela holds the world's largest oil reserves, and though bringing them back online after years of neglect wouldn't be easy, it might be a medium-term option - though a politically fraught one, given that oil revenue would be used to underwrite the Maduro regime's continuation. 

The oil for Repsol and Eni will be treated as repayment for past PDVSA debts, according to Reuters. The cash-free transaction is conditioned on the delivery to markets in Europe, with no possibility of resale. 

If actualized, a Venezuelan export deal with the U.S. would contain a twist of irony: Russian bankers and oil companies have been helping keep Venezuela's clandestine exports afloat for years, providing the means to flout American sanctions. The same exports could now serve to displace Russian barrels on the European market. 

U.S. oil major Chevron, which has an extensive history in Venezuela, has long pushed to overturn the export ban. It does not appear to have been included in the State Department's limited sanctions-relief allowance, but Chevron has received permission from the administration to enter into limited talks with Maduro regime officials about its future plans. In exchange for these small concessions, the Biden administration expects to see progress in negotiations between Maduro and his political opponents, led by U.S.-recognized interim president Juan Guaidó.