Venezuelan oil company PDVSA is ready to resume work on previous US terms
Sources at the company said that Venezuela's PDVSA, the state-run oil firm, is preparing to resume its work in its joint ventures with terms similar to those of Biden's licenses once U.S. president Donald Trump reinstates authorizations to its partners for them to export and operate oil under swaps. Washington is preparing to grant new operating authorizations to key PDVSA partners. The first of these will be Chevron. These permits will likely mark a shift in Washington's policy from the pressure campaign it adopted earlier this year, which led to the cancellation of oil licenses by March.
The authorizations may not be publicized this time. However, Venezuelan President Nicolas Maduro, in a late Thursday statement, praised the political efforts to keep Chevron within the country, and stated that the company is involved in working groups for expansion operations.
Venezuelan licenses have changed hands several times as part of the political negotiations between different U.S. administrations since the U.S. imposed its first energy sanctions in 2019.
In recent years, the OPEC nation has stabilised its production at about 1 million barrels of oil per day. The majority of exports are to independent Chinese refiners. Washington announced a separate secondary tariff on Venezuelan oil buyers this year, but it has not been implemented.
Venezuela may be able to secure much needed revenue if the licenses were granted again with terms that allow PDVSA partners to contribute towards procurement and contract payment, while also importing and exporting crude oil via swaps.
The authorizations will come after the prisoner exchange between Venezuela and America this month.
It is unclear how the U.S. State Department will enforce its prohibition that no money from Venezuelan imports can reach Maduro. PDVSA's policy has been to not allow its partners' cargoes leave without paying mandatory taxes and royalties.
A company source stated that the situation would not be different from last time, in reference to PDVSA’s preparations.
PDVSA, Venezuela's Oil Ministry and the PDVSA did not respond to requests for comments. Chevron says it operates globally in compliance with all applicable laws and regulations including the U.S. sanction framework.
One source explained that PDVSA had a previous agreement with Chevron in which the U.S. company supplied diluents and the state-owned firm delivered oil cargoes to Chevron for export to the U.S.
The agreement with European companies such as Italy's Eni and Spain's Repsol, France's Maurel & Prom, and Spain's Repsol was slightly different.
The source said that because the debt owed by these firms was lower, swaps were almost entirely oil-for fuel exchanges, with only a minimal amount of debt being repaid.
Sources said that PDVSA does not see any other way to resume oil exports into the U.S. or Europe in light of the U.S. sanction. PDVSA cancelled oil cargoes assigned to Chevron in April after the two companies couldn't agree on a solution for payment.
Washington's new approach on energy sanctions against Venezuela has divided Venezuela's opposition once again, with some leaders celebrating Chevron returning to full operations while others warned it could benefit Maduro.
(source: Reuters)
