A sign is displayed in front of a Chevron gas station on July 31, 2020 in Novato, California.
Justin Sullivan | Getty Images
Chevron on Saturday received an expanded U.S. license allowing the second-largest U.S. oil company to resume production in Venezuela and import crude from the South American country into the United States.
The decision allows Chevron to revive existing oil projects in the US-sanctioned country and bring new oil supplies to refiners in the United States. However, it limits cash payments to Venezuela, which could reduce the amount of oil available to Chevron.
The terms of the license are designed to prevent Venezuela’s state-owned oil company PDVSA from receiving proceeds from Chevron’s Venezuelan oil sales, U.S. officials said. The license lasts for six months and will automatically renew monthly thereafter, according to the US Treasury.
A Chevron spokesperson said the company is reviewing the license terms and declined immediate comment.
The United States issued the license the same day that Venezuela and opposition leaders began a political dialogue in Mexico City agreeing to ask the United Nations to oversee a fund to help provide food, health care health and infrastructure to Venezuelans.
The terms prohibit Chevron from helping the OPEC member develop new oil fields, but offer the company a way to recoup some of the billions of dollars owed by PDVSA through oil sales. The United States said it reserves the right to cancel or revoke the license at any time.
“This action reflects the long-standing U.S. policy of providing targeted sanctions relief based on concrete actions that alleviate the suffering of the Venezuelan people and support the restoration of democracy,” the U.S. Treasury Department said in a statement.
The clearance could provide limited new crude supplies to a market currently struggling to replace the Russian barrels shunned by Western buyers during its invasion of Ukraine. Chevron and other U.S. oil refiners could benefit from supplies of Venezuelan heavy crude flowing to their processing plants on the U.S. Gulf Coast.
Analysts have warned that Venezuelan President Nicolas Maduro is likely to bristle at the restrictions included in the license, including the lack of cash payments his administration has been seeking. Proceeds owed to Venezuela from Chevron’s oil sales would go to a humanitarian fund rather than PDVSA.
The conditions “will require significant”, a US official said, adding that further sanctions against Venezuela and its officials remain in place.
“There’s no great short-term incentive” for Venezuela, said Francisco Monaldi, a Latin American energy policy expert at Rice University’s Baker Institute for Public Policy. The terms could be relaxed over time depending on how the talks unfold in Mexico City.
“We will see how Maduro’s government reacts to it and how many shipments will then go to Chevron,” Monaldi said.
