Existing Foreign Oil Producers in Venezuela May Get Licenses Despite Sanctions

After reestablishing sanctions against Venezuela, Washington is gearing up to issue restricted licenses to certain companies that already have oil-producing operations in the country, Reuters said in an exclusive report on Thursday, citing two unnamed sources close to discussions. 

According to Reuters’ sources, priority will be given to those already operating in Venezuela, including Chevron, Spain’s Repsol, Italian Eni, French Maurel & Prom, and Shell, all of whom have existing oil production in Venezuela. At the same time, Reuters notes that India’s Reliance Industries, which has no existing Venezuela assets, will likely not receive the approval it is seeking from the U.S. 

Companies seeking to enter Venezuela may not make the list, while Reuters speculates that the decision is intended to encourage those already operating there to unfreeze their projects and potentially expand operations. 

The decision, if it proves true, suggests that Washington is hoping to continue to add Venezuelan barrels to the market despite the return of sanctions over Venezuelan strongman Nicholas Maduro’s violations of conditions that called for the holding of free and fair elections in July. Instead, Maduro has pursued a plan to decimate the opposition, including barring its first key presidential candidate from running, using trumped-up criminal charges. 

Reuters reports that a new deal would also put a cap on the government’s collection of revenue from oil. 

Last week, the U.S. extended a general license through November 15, allowing certain transactions with Venezuelan state oil company PDVSA that are necessary for wind-down operations, according to a notice from the U.S. Treasury Department. The extension covers key players in the industry, including Halliburton, Schlumberger, Baker Hughes Holdings, and Weatherford International PLC.

In November last year, Venezuela’s Oil Ministry said crude output had hit 850,000 barrels per day, up from 786,000 in October. 

In April, PDVSA moved to speed up its plan to use the cryptocurrency Tether, pegged to the U.S. dollar, for oil export transitions to avoid having revenues from oil sales frozen in foreign bank accounts based on U.S. restrictions. 

By Charles Kennedy for Oilprice.com

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