Sources say that the US will issue a general license to lift some sanctions against Venezuelan oil industry
Four sources said that the U.S. is preparing to issue a license to lift sanctions against Venezuela's energy industry. This would be a shift from the previous plan of granting individual exemptions for companies wishing to do business with Venezuela.
After the capture by the U.S. of Venezuelan president Nicolas Maduro in early this month, U.S. official have stated that Washington will ease sanctions on Venezuela's Energy Industry to facilitate a $2 Billion oil supply deal between Caracas Washington and an ambitious 100 billion dollar reconstruction plan for Venezuela's Oil industry.
In recent weeks, many partners and customers of the state oil company PDVSA have applied for individual licences to increase output or exports. These include producers Chevron and Repsol, refiner Reliance Industries and a few U.S. oil services providers.
Two sources claim that the large number of requests made to the U.S. Government has slowed down the progress of plans to increase exports and to get investments flowing into the country.
Requests for comment from the U.S. Treasury Department and Venezuela's oil ministry were not immediately answered.
The Treasury's Office of Foreign Assets Control designated Venezuela's entire oil and gas industry as subject to U.S. sanction in 2019, after Maduro’s first reelection. Washington did not recognize it.
Over the past seven years, sanctions have changed depending on which administration in the United States was in power. They were modified by executive orders and licenses that exempted some producers and clients from these measures.
A broad license was issued by former U.S. president Joe Biden to exempt many companies from sanctions and allow them to export Venezuelan oil. This allowed for higher crude exports and production until President Donald Trump's second term began in the first quarter last year.
Trump's administration revoked this authorization to exert pressure on Maduro and ordered that the companies cease all transactions. In December, Trump also ordered the blockade of any vessels sanctioned that were entering or leaving Venezuela. This reduced Venezuela's oil output to 500,000 barrels a day, down from 952 000 bpd.
According to PDVSA documents, and data from ship tracking, oil exports last year averaged 850,000 barrels per day, driven up by increased crude production. PDVSA is struggling to reverse the output cuts that it was forced to make in January due to a massive buildup of inventory caused by?the U.S. Blockade.
Data and documents show that the licenses issued by the U.S. to Vitol and Trafigura to export up to 50,000,000 barrels of Venezuelan crude oil to the U.S., and to other destinations, this month have already enabled the country to exhaust 11.3 millions barrels. Millions of barrels still remain in tanks and vessels on land.
Oil executives see the need for more licenses to speed up exports and increase output in oilfields with equipment. They also want to boost domestic refining, repair damaged infrastructure, and fix unstable power supplies.
One source said that the general license being prepared could include special privileges for U.S. companies over foreign competitors, as part Trump's policy to put American firms first.
Sources said that a sweeping reform to Venezuela's oil law, which would facilitate oil and natural gas investment, production and exports, was approved by an initial vote in the last week. It is expected to be given a final approval from the National Assembly next week. (Reporting Marianna Pararaga, Jarrett Renshaw, and Don Durfee. Additional reporting by Timothy Gardner and Arathy Smasekhar. Simon Webb and Nia Williams edited the story.
(source: Reuters)
