EXCLUSIVE Chevron prepares to trade Venezuelan oil if US releases sanctions – sources

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EXCLUSIVE Chevron prepares to trade Venezuelan oil if US releases sanctions – sources

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Chevron’s logo is visible at the company’s office in Caracas, Venezuela on April 25, 2018. REUTERS / Marco Bello / file Photo

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HOUSTON / WASHINGTON, March 14 (Reuters) – Chevron Corp. prepares to take operational control of its joint ventures in Venezuela if Washington eases sanctions on Caracas to increase crude oil supplies after banning oil imports from Russia, according to three people familiar with the situation.

The US oil major has begun forming a trading team to market oil from Venezuela, two of the people said. If they receive U.S. approvals, Chevron aims to expand its role in the four joint ventures it shares with state-owned PDVSA, they added.

Chevron has asked the U.S. government for a license that is broad enough to have more say in its joint ventures in Venezuela, a first step to recovering crude oil production and exports and to control where oil is sent, the authorities said. three people. Since 2020, Chevron has delegated most of the decision-making process to the state-owned PDVSA.

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US officials have made it clear, however, that any new authorization will depend on Venezuelan President Nicolas Maduro taking further political steps, two sources said, such as releasing more jailed Americans and setting a fixed date for resuming negotiations with the Venezuelan opposition.

The moves proposed by Chevron could revitalize Venezuela’s oil production and exports after years of underinvestment and sanctions reduced it to about 755,000 barrels per day (bpd) last month from 2.3 million barrels per day in 2016. Chevron’s joint ventures with PDVSA had produced around 200,000 barrels per day prior to the US sanctions and lack of funding reduced their production.

LOGISTICS TEAM

No date has been set for the authorization to be issued. But Chevron has begun preparations for employees to obtain Venezuelan visas in Aruba, ready to head to Caracas if the US Treasury eases restrictions, people said.

Last week, US President Joe Biden banned US imports of Russian oil, adding to a string of sanctions after Russia invaded Ukraine, an action Moscow called a “special military operation.”

Chevron aims to begin moving Venezuelan oil to refineries as soon as next month. The US ban on Russian imports last week allows oil with existing contracts to arrive in the country until April 22.

“Since Venezuelan barrels were banned in the US in 2019 and Colombia and Mexico cut key exports to the US, Russian barrels have fueled Gulf refineries,” said one person involved in the talks.

Chevron had significantly reduced its presence in Venezuela after Washington tightened sanctions against Venezuela in 2020. For years, Chevron and other PDVSA partners have called for increased operational oversight.

The United States is drafting a new license that would allow Chevron to take a more active role in Venezuela, a person familiar with the matter said. Washington is evaluating similar oil-for-debit authorizations for Spain’s Repsol (REP.MC) and Italy’s Eni SpA. Overall, they owe billions of dollars from their Venezuelan joint ventures.

Chevron declined to comment, but reiterated in a statement that its operations in Venezuela comply with US sanctions and remain “a constructive presence in Venezuela”.

PDVSA and the Venezuelan oil ministry did not respond to requests for comment.

A State Department spokesperson said the US government “does not envisage any sanctions action,” but added, “We made it clear that we would review some sanctioning policies if Venezuelan sides made significant progress in Venezuela-led negotiations in Mexico. towards a democratic solution. “

The US Treasury Department did not immediately respond to a request for comment.

POLITICAL SPEECHES

This month, Washington quietly resumed diplomatic engagement with Venezuela, a close ally of Russia. Maduro released two jailed Americans last week and Washington insisted that others be released as well. Maduro expressed his willingness to resume dialogue with the opposition after suspending talks in Mexico in October. US officials want a firm commitment to discuss free elections.

On Sunday, US National Security Advisor Jake Sullivan told NBC that any easing of sanctions for Venezuela must be tied to “concrete steps” by Maduro.

The Biden administration had not previously made Venezuela a foreign policy priority. That changed when Middle Eastern and US shale producers did not increase their crude oil supplies when the White House asked them to do so after the invasion of Ukraine.

Congressional Republicans and even some of Biden’s Democratic colleagues, such as US Senator Bob Menendez, have opposed any deal to benefit the Socialist president. Washington condemned Maduro’s re-election in 2018 as a farce.

Last year the United States imported 670,000 barrels per day (bpd) of Russian oil and fuel. One of the few countries capable of replacing such imports is Venezuela. Before the sanctions, its oil was mainly going to refineries on the US Gulf Coast. to know more

TIMELY APPROVAL

The barrels marketed by Chevron could help PBF Energy (PBF.N), Valero Energy (VLO.N) and Phillips 66 (PSX.N) close their supply gap, the source said. All of them have operations oriented to the operation of heavy oils.

Chevron held parallel talks with PDVSA to expand the governance of its joint ventures. Any deal would likely be temporary unless Venezuela enacts profound reforms to its oil legislation, which require PDVSA to be the majority shareholder in any joint venture.

While PDVSA president Asdrubal Chavez advocates an expanded operational role for Chevron, some senior Venezuelan officials oppose the change, three sources familiar with the matter said.

Venezuela holds around 300 billion barrels of oil reserves, the largest in the world, but has been unable to meet its production targets due to underinvestment, poor maintenance, lack of supplies and US sanctions. to know more

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Recommendations by Marianna Parraga in Houston and Matt Spetalnick in Washington; edited by Gary McWilliams and David Gregorio

Our Standards: Thomson Reuters Trust Principles.

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