US Lets Some Oil Companies Produce Oil, Gas in Venezuela
(Bloomberg) --
The Trump administration issued licenses allowing a handful of Western oil companies to operate in Venezuela, the latest step in a campaign to revive the country’s oil-dependent economy.
The licenses issued by the US Treasury Department on Friday authorizes five companies to engage in oil and gas contracts and transactions with Petróleos de Venezuela SA and its subsidiaries, and limits payments including taxes to a US-controlled account. The companies are BP PLC, Chevron Corp., Eni SpA, Repsol SA and Shell PLC.
Chevron is already operating in Venezuela under a restricted license but will now be allowed to expand its operations. The other companies previously held licenses that the Trump administration revoked last year as it was seeking to ratchet up pressure on Caracas. Under the new terms, contracts will be governed by the US and reviewed by the State and Energy Departments every 90 days.
The list of authorized companies conspicuously excludes some incumbents, such as French-listed Maurel et Prom SA, which is controlled by Indonesia’s state-controlled Pertamina. Maurel et Prom didn’t immediately reply to a request for comment.
Some of the companies specified in Friday’s action said in separate statements that they were reviewing the licenses to determine what they entail for their Venezuela projects.
Shell welcomed the US government step, saying Venezuela and its Dragon offshore gas project align with its global strategy. An Eni spokesperson said the company is “currently assessing the opportunities it opens up, as part of an ongoing and constructive dialogue with the US Authorities.” BP said it “takes compliance with sanctions and export controls extremely seriously.”
The licenses are the latest step by the Trump administration to stimulate Venezuela’s oil industry and revive the local economy following the capture of leader Nicolás Maduro earlier this year. The country’s oil production has fallen by about half since 2017, when Washington first imposed financial sanctions on the country.
On Thursday, US Energy Secretary Chris Wright toured a project operated by Chevron in Venezuela’s Orinoco oil belt and told reporters that the opportunity for cooperation between the US and the South American nation is “immense.”
Despite Venezuela’s abundant oil and gas reserves, most oil companies remain wary so far. Some like ConocoPhillips are still owed money from past nationalizations. ConocoPhillips Chief Executive Ryan Lance said his priority is to recover money owed, rather than drill new wells. Exxon Mobil Corp. chief Darren Woods described Venezuela as “uninvestible” during a meeting with Trump at the White House a week after Maduro’s ouster. Chevron said it plans to finance investments with cash from oil sales, rather than commit new money.
Easing Controls
Venezuela’s new leader Delcy Rodríguez has followed through with Trump’s plan by promoting reforms to attract investment. The country recently eased government controls, including a long-awaited overhaul of its state-dominated hydrocarbons law, opening the door for private firms to pay lower taxes, market their own production and settle contract disputes through international arbitration.
Since Maduro’s capture, the US has been easing sanctions while keeping a grip on the oil industry. Recently, the Trump administration allowed traders and refiners to buy oil directly from PDVSA, but proceeds must go to US government-controlled bank accounts. The sale of US diluent to the South American country has also been permitted.
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