U.S. Agrees to Let Chevron Export Oil From Venezuela
The Biden administration has agreed to let Chevron export oil from Venezuela, easing sanctions on the ruling regime in Caracas and slightly loosening constraints on the global oil supply - days ahead of the deadline for EU sanctions on Russian oil exports, which will likely disrupt the international oil trade.
As part of an independently-negotiated deal between Venezuela's "Unitary Platform" opposition and the regime of President Nicolas Maduro, the White House has agreed to grant Chevron a license to resume operations at its existing oilfields in Venezuela. The U.S.-based oil major has several JVs in the country, but it was forced to abandon all of its operations in Venezuela two years ago due to the imposition of U.S. sanctions on Venezuela's socialist government.
The new license is contingent on negotiations between the Maduro regime and Venezuela's political opposition, and it will be reviewed after six months. The license requires that the profits of the oil sales can only go towards repaying debts that Venezuelan state oil company PdVSA owes to Chevron. It is structured with reporting requirements to make sure that the earnings do not pass into the hands of the Maduro regime.
In addition, the deal provides for unfreezing about $3 billion in sanctioned Venezuelan state bank accounts located overseas. The money is earmarked for humanitarian relief, and it will be administered with UN oversight.
The decision is timely from a market supply standpoint. Upcoming shipping restrictions on Russian oil could force Russian producers to shut in up to 1.4 million barrels a day of production, according to the IEA. Bringing more Venezuelan barrels back online could modestly reduce the supply crunch - but the White House insists that the decision is not about the oil.
“This action is not being taken in response to energy prices, this is a limited license. As we have said in the past, this is about the regime taking the steps needed to support the restoration of democracy in Venezuela," a Biden administration official emphasized in a statement to Axios.