A comment on the Oil Deal between Washington and Caracas by Mikaila D
An American delegation met with the Venezuelan government in search of a new oil supplier because Russia stopped supplying oil due to the sanctions imposed, caused by the war with Ukraine. In turn, Maduro wants the administration of President Joe Biden to ease the economic sanctions imposed by Donald Trump. The first effect of this contact was the release of two US citizens from prison in exchange for the release of the nephews of Cilia Flores, wife of Nicolás Maduro. They were imprisoned in the US for drug trafficking.
Maduro said that they are prepared to grow one, two, three million barrels (per day)” and in January 2022, PDVSA barely produced 755,000 barrels.
According to AFP in an interview with Francisco Monaldi, director of the Energy Program for Latin America at the Baker Institute for Public Policy at Rice University in Texas. Monaldi replied that:
“There has to be a change in the sanctions in place. Something limited could be done, like giving (US oil company) Chevron or some Western companies a license to export some shipments to the United States. They could specifically authorize them to pay (oil company) Venezuelan state company) PDVSA for those shipments so that the Venezuelan government would authorize it in turn.
Venezuela produces 750,000/800,000 barrels of oil per day and the maximum it could produce in the next six months is about 950,000 barrels per day, perhaps up to a million. That is very little compared to Russia, which produces 11 million barrels a day and exports 7 million. In other words, Venezuela would not help prevent the price of oil from rising at all. If the United States suspends the purchase of Russian oil, Venezuela could help very partially to solve the problem of some American refineries in the Gulf of Mexico that now use Russian oil. But it is simply a question of temporary supply, if there was no Venezuelan crude it would be resolved with another crude. In the end, the price of oil and gasoline in the United States are determined by the international market, not by what Venezuela can export.
What is happening with Russia can affect Venezuela for two reasons, and that can make Nicolás Maduro interested in reaching an agreement with the United States and not be so calm despite the fact that the price of oil is so high and that benefits. First, because the way in which Venezuela evades sanctions is through Russian banks. So, when the Russian banks are sanctioned, that can hinder the flow of money to Venezuela. Second, because if the Russians cannot export to the United States, they will try to export to China, the most important non-Western market in the world and where they already sell more than a million barrels. And that can be very bad for the Venezuelan crude that is placed in China.”
In November 2022, the United States Department of the Treasury announced that its Office of Foreign Assets Control (OFAC) granted a license authorizing the oil company Chevron Corporation to resume limited oil extraction operations in Venezuela. They point out in a statement that “This action reflects the long-standing policy of the United States to provide targeted sanctions relief based on concrete measures that alleviate the suffering of the Venezuelan people and support the restoration of democracy.”
The United States maintains that it follows most of the sanctions and that the license granted by the Treasury Department is due to the dialogue between the Maduro regime and the opposition (who also belong to the Maduro regime) that is currently taking place in Mexico. and according to what they specify, this is a first step, it shows their willingness to gradually withdraw the sanctions if the dialogue advances with concrete results. “We have long made it clear that we believe that the best solution in Venezuela is a negotiated solution between the two parties. And to foster it, we have said that we are willing to provide targeted sanctions relief based on concrete measures that alleviate the suffering of the Venezuelan people and move them closer to the restoration of democracy.”
The license will be valid for six months and the United States Government will reserve the power to modify or revoke the authorizations at any time if the Nicolás Maduro regime does not negotiate in good faith or does not comply with its commitments.
According to journalist Miguel Jiménez, correspondent for El País in the United States:
The general license granted by the Treasury Department authorizes ordinary transactions necessary for certain activities related to the operation and management by Chevron Corporation or its subsidiaries of its joint ventures involving the blocked Venezuelan state oil company, Petróleos de Venezuela, S.A. (PDVSA) or any entity in which PDVSA owns, directly or indirectly, a participation of 50% or more. It extends to the production and extraction of petroleum and petroleum products, including maintenance, repair, or related services; the sale, export or import to the United States of petroleum and derivatives, as long as they are first sold to Chevron; guarantee for the health or safety of the personnel or the integrity of the operations or assets of Chevron and its subsidiaries in Venezuela, and the purchase and importation into Venezuela of goods or supplies related to the above activities, including diluents, condensates, oil or products of natural gas. The authorization prevents PDVSA from receiving benefits from Chevron’s oil sales. GL 41 only authorizes activity related to Chevron’s joint ventures in Venezuela, and does not authorize any other activity with PDVSA. Specifically, the license prevents the payment of any tax or royalty to the Government of Venezuela, the payment of any dividend, including a dividend in kind, to PDVSA or its subsidiaries; Chevron’s sale of Venezuelan oil or petroleum products to any country other than the United States; any transaction involving an entity located in Venezuela controlled by a Russian entity, and Chevron’s expansion into new oil fields in Venezuela beyond what it had on January 28, 2019. “Other Venezuela-related sanctions and restrictions imposed by United States are still in force; The United States will vigorously comply with these sanctions and will continue to hold accountable any actor who engages in acts of corruption, violates US law, or abuses human rights in Venezuela.”