December 5, 2022

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The US is preparing to authorize Chevron to increase Venezuela’s oil production. From Health & Fitness Journal

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©Health & Fitness Journal. FILE PHOTO: Chevron’s logo is seen at the company’s office in Caracas, Venezuela on April 25, 2018. REUTERS/Marco Bello/File Photo

By Marianna Parraga

HOUSTON (Health & Fitness Journal) – Chevron Corp (NYSE:) could soon receive U.S. approval to expand operations in Venezuela and resume trading in its oil once the Venezuelan government and its opposition resume political talks, four with the government said Matter familiar to people on Wednesday.

A US permit for Chevron to help rebuild the country’s dwindling oil production was one of the biggest plums in talks between the Venezuelan government and its opposition.

US officials tried this year to facilitate a return to negotiations between Socialist President Nicolas Maduro and the country’s opposition by offering a slight relaxation of sanctions and releasing some Venezuelans in US jails.

Both Venezuelan parties and US officials are pushing to hold talks in Mexico City this weekend, the first since October 2021. Maduro gained ground this year amid newly elected left-wing leaders in Brazil and Colombia and weakening opposition support Influence.

Chevron declined to comment on the pending permit or terms. The US No. 2 oil company continues to abide by the terms of its existing license, a spokesman said. A maintenance license expires on December 1st.

TERMS OF LICENSE

The terms being prepared for approval will prevent Venezuela’s state oil company PDVSA from receiving proceeds from Chevron’s oil sales. And they will “stop the use of corrupt shadow companies that control the flow of Venezuelan oil to countries like China,” said a person familiar with the matter in Washington.

White House officials aim to “shift oil sales from illegal and opaque channels to transparent, legitimate channels,” the person said. The United States could revoke the permits if the Maduro administration fails to negotiate in good faith or honor its commitments, this person said.

“We have long made clear our willingness to provide targeted assistance based on concrete steps that will alleviate the suffering of the Venezuelan people and move them closer to restoring democracy,” a US State Department spokesman said.

US President Joe Biden’s administration has reason to give Chevron a broader operating license as US shale production profits slow, Russia’s oil exports shrink under sanctions and Saudi Arabia signals potential OPEC production cuts.

The United States stopped oil prices from skyrocketing this year by releasing more than 200 million barrels of the country’s emergency oil reserves. But these releases are set to end soon.

RESULT OF PRIOR SANCTIONS

Biden’s administration had signaled that an easing of sanctions on Venezuela, including giving Chevron a full license to restart oil production and regaining trade privileges in Venezuela, would only happen if both sides made progress in policy talks.

The US Treasury Department could issue a new license on Monday or Tuesday. Expanded terms are not in response to concerns about energy prices, but reflect a desire to “support the restoration of democracy in Venezuela,” one of the people said.

Chevron partners with PDVSA in several oil joint ventures that pump and process for export. Collectively, the companies had been producing about 200,000 barrels per day (bpd) before US sanctions and lack of funding reduced their production.

PDVSA did not respond to requests for comment on the deliberations.

Following oil sanctions on Venezuela in 2019, Chevron was granted a waiver to trade its Venezuelan crude to pay off billions of dollars in outstanding debt. Those privileges were suspended a year later by then-President Donald Trump as part of his “maximum pressure” strategy to oust Maduro, whose re-election in 2018 was not recognized by the West.

The United States this year began considering Chevron’s request to expand operations with greater urgency as Washington looked for oil to replace supplies hit by sanctions on Russia and OPEC’s decision to halt production throttle.

INSTALLATION PRINT

In recent weeks, under the auspices of the presidents of France, Colombia and Argentina, representatives of Maduro and the opposition have held talks in Paris to break the political deadlock.

In Washington, Republicans and some of Biden’s Democrats have been skeptical that Maduro is willing to negotiate in good faith and oppose easing sanctions unless he gives something back.

A growing number of oil companies are exiting joint ventures with PDVSA because of mounting debt and frozen operations. The psychiatrist positions Chevron as the only strong partner left that could revive production, which is expected to fall to about 650,000 barrels per day this year, below the official target of 2 million barrels per day.

Venezuela has about 300 billion barrels of oil reserves, the largest in the world, but has failed to meet its production targets due to underinvestment, poor maintenance, lack of supplies and US sanctions.

(This story has been refiled to add the missing word “cut” in paragraph 6.)

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