Chevron resumes Venezuela’s oil production as US sanctions ease

The United States on Saturday allowed Chevron to resume oil production through its joint ventures in Venezuela, after the socialist government in Caracas and the opposition resumed political talks in Mexico City. .

The easing of oil sanctions signals a major shift in Washington’s stance towards the Venezuelan government. The United States had previously sought to force authoritarian president Nicolás Maduro to resign. In 2019, they recognized opposition leader Juan Guaidó as the country’s legitimate leader along with dozens of allies, after claiming that Maduro had stolen the presidency in a rigged election last year. 2018.

Under sanctions imposed by the Trump administration in 2019 as part of the maximum pressure campaign against Mr. Maduro, Chevron is only allowed to maintain its assets in Venezuela, not to export crude oil or open wide activities.

Maduro has presided over the economic collapse in his oil-rich nation, sending 7 million people to the flee amid widespread human rights abuses. Protests at home and diplomatic pressure abroad were unsuccessful in ousting him, thanks in part to support from Russia, Cuba, China, Turkey and Iran.

On Saturday, representatives of Venezuelan government and the opposition returned to political talks in Mexico — suspended for more than a year — and signed a rare humanitarian agreement that sought to free up frozen Venezuelan funds abroad for medical care, infrastructure and education. That fund, estimated to be worth about $3 billion, will be administered by the United Nations.

Around the same time on Saturday, the US Treasury Department announced it was easing oil sanctions.

“This action reflects the longstanding policy of the United States to provide targeted sanctions based on concrete steps to alleviate the suffering of the Venezuelan people and assist in the restoration of democracy.” Ministry of Finance said in a statement.

Venezuela has the world’s largest proven oil reserves and used to pump more than 3 million barrels per day, although after years of mismanagement and US-led sanctions, production is now at a low level. less than 1 million barrels/day.

Francisco Monaldi, a Venezuelan energy policy expert at the Baker Institute in Houston, estimates that Chevron’s joint ventures in Venezuela could produce 80,000 bpd to 100,000 bpd “within a few months”, an increase from the current 50,000 bpd. After that, “it will require significant investments, it will take about two years to reach an additional 120,000 bpd.”

On Saturday, a senior US administration official at a news conference with reporters said the six-month license would be subject to change if the “Maduro regime does not negotiate in good faith or follow through on its commitments.” your end”.

Venezuela’s national oil company PDVSA will not receive profits from the oil sales under the agreement and the revenue will be used to repay Chevron’s debt. The official said Saturday’s move would shift some of Venezuela’s oil sales off the black market “to legal, transparent channels.”

The official denied that the administration’s decision to allow Chevron to resume limited operations in Venezuela was affected by the global oil market and said Saturday’s move would not significantly affect prices. . The Biden administration has been looking for Russian energy alternatives after this year’s invasion of Ukraine, in part to counter rising gasoline prices. The European Union is set to ban Russian oil imports on December 5.

The surge in the crude oil market pushed U.S. gasoline prices to record highs earlier this year, fueling decades-high inflation that threatens to push the U.S. economy into recession.

The White House’s bid to cool prices also includes an emergency release of oil from the federal reserve in recent months and calls for domestic shale producers to ramp up drilling. Prices have fallen in recent weeks amid fears of a global recession.

“The decision by the Office of Foreign Assets Control brings more transparency to the Venezuelan oil sector,” Chevron said in a statement. “We are determined to maintain a constructive presence in the country and continue to support social investment programs that provide humanitarian relief.”

Negotiations between the government of Caracas and the opposition over a political solution to the crisis in Venezuela began in September 2021 but the Maduro government withdrew just a month later after a key ally Alex Saab extradited to the US on charges of money laundering.

US Senator Bob Menendez, Chairman of the Senate Foreign Relations Committee, Democrat, cautiously welcomed the resumption of talks but warned that the US should be prepared to quickly reimpose the sanctions if Maduro fails to live up to his commitments.

“If Maduro again tries to use these negotiations to buy time to further strengthen his criminal dictatorship, USA and our international partners must take back the full force of our sanctions that brought his regime to the table in the first place,” he said.

Additional reporting by Derek Brower

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