Business & Economy

Chevron license raises expectations for other multinationals in Venezuela

By Carlos Seijas Meneses

Caracas, Dec 15 (EFE).- The United States’ decision last month to allow American oil company Chevron Corp. to resume limited extraction operations in Venezuela has raised expectations among other multinational companies also looking to restart their business there.

Venezuelan crude production, which ended November at just 693,000 bpd, stood at around 2 million bpd in 2016 but has not topped 1 million bpd since June 2019, according to reports from the Organization of the Petroleum Exporting Countries (OPEC).

Output has remained low despite the efforts of leftist President Nicolas Maduro’s administration to achieve production of 2 million bpd this year.

But the easing of US sanctions on Nov. 26 has provided cause for new optimism.

Venezuela’s government now expects that other multinationals will be allowed to follow in Chevron’s footsteps due to the current elevated energy needs in the US and the European Union, which have banned most Russian oil imports in response to Moscow’s invasion of Ukraine, the head of the Venezuelan unicameral legislature’s Finance Committee, ruling party lawmaker Jesus Faria, said earlier this month.

Companies like Spain’s Repsol and Italy’s Eni also are hopeful about an easing of restrictions on their operations in Venezuela, which boasts the world’s largest crude reserves, according to the Venezuelan Petroleum Chamber (CPV).

“We expect there to be a pronouncement that allows European operating companies to come in as well and resume their operations in a more comprehensive way in Venezuela, including of course aspects having to do with commercializing products,” engineer Enrique Novoa, CPV’s president, told Efe.

On Nov. 26, following the resumption of dialogue between Venezuela’s government and opposition and an agreement by the two sides to implement a roughly $3 billion humanitarian relief program, the US Treasury Department’s Office of Foreign Assets Controls issued a license authorizing Chevron to produce and sell crude cargoes to the US from its joint ventures with Venezuelan state oil company PdVSA.

That renewable license, initially in effect for six months, eased the harsh US sanctions imposed in 2019 by then-President Donald Trump’s administration, which accused Maduro of remaining in power through fraudulent elections the year before.

However, it does not allow PdVSA to receive any profits from Chevron’s oil sales.

Experts said the resumption of Chevron’s operations in Venezuela will boost production in that country by some 125,000 bpd.

Economist Victor Alvarez echoed Novoa’s remarks, saying that now that a license has been granted to Chevron the “overapplication” of sanctions should be remedied so that other foreign oil companies in the country, such as Repsol and Eni, can resume their operations.

He recalled that the measures the Trump administration adopted three years ago also included sanctions on companies with interests in the US that “dared to have business with Venezuelan state-owned companies.”

The expert told Efe that PdVSA’s private partners, which had been barred from operating due to the sanctions, now “will demand equal treatment: either there’s a license for everyone or there are no licenses for anyone.”

Repsol has a stake in the Orinoco Belt, a strip in central and eastern Venezuela that overlies the world’s largest petroleum deposits, and in a joint-venture company in the western state of Zulia.

Eni, for its part, holds a 40 percent stake in two joint ventures in Venezuela’s northeast and nearly a 20 percent stake in another company in that same region. EFE


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