U.S. weighs Chevron’s request to take Venezuelan oil for debt payment

The Biden administration is considering a Chevron Corp proposal to allow the U.S. oil major to accept and trade shipments of Venezuelan oil to recover outstanding debt, four people familiar with the talks said.

Chevron representatives have held at least one high-level meeting in recent months with U.S. diplomats as well as Venezuelan opposition envoys, according to two of the people. They described it as a milestone in the company’s year-long lobbying efforts to get a change to its operating license in Venezuela.

No decision has been made, said two sources in Washington who declined to be identified, and a timeline for further consideration remains unclear.

Chevron wants Washington to restore the business privileges it enjoyed for some time under former President Donald Trump’s administration. The company and other foreign producers were allowed to take in and export Venezuelan oil to collect dividends and debt from joint ventures with the state-owned oil company PDVSA.

The deal, which until mid-2020 allowed Chevron to trade 1-2 million barrels per month of Venezuelan crude, was suspended as part of Trump’s “maximum pressure” campaign.

The strategy has weighed heavily on oil shipments from Venezuela, but has recently failed to prevent oil revenues from reaching Venezuelan President Nicolas Maduro, allowing exports to rebound.

“The Biden administration has growing pressure to ease sanctions on Venezuela after Trump’s strategy failed,” said one of the people familiar with the meetings. “One of the most important is to bring something to the negotiating table” with Maduro, one of the sources said.

Venezuela owes hundreds of millions of dollars to Chevron, the last American oil major with personnel in the country, from its joint ventures.

“It is regular practice to meet with U.S. government officials to provide their perspective on energy issues important to the company,” Chevron spokesman Ray Fohr said in response to questions about the plan. corporate lobbying.

Chevron is “committed to the safety and well-being of our employees and their families, the integrity of our joint venture assets, and the company’s social and humanitarian programs,” he added.

The US Treasury Department declined to comment on the matter. A spokesman for the US State Department said the government “did not anticipate any sanctions actions”. The sanctions, the official said, “deprive the Maduro regime’s revenue streams that fund repression and line the pockets of regime officials, as well as protect the US financial system from exposure to corrupt and illicit financial flows.”

Venezuela’s oil ministry and PDVSA did not respond to requests for comment.

Allowing some oil shipments to move under U.S. sanctions could signal flexibility toward Venezuela. Easing restrictions to benefit a major oil company, which could boost jobs in the United States, is less likely to face a Republican backlash, one of the people said.

The Biden administration has also been looking for ways to encourage Maduro to resume talks with the Venezuelan opposition that would not offer major concessions that his government would benefit from.

A new deal for Chevron could also improve ties with India, whose refiners were in the past among the main recipients of Venezuelan oil, supplied by companies licensed by the United States.

But ahead of November’s midterm elections that could determine whether Biden’s Democrats will retain control of the U.S. Congress, some advisers are wary of moves that could be seen as undermining tough sanctions on Venezuela, particularly in Florida, home to a large Cuban-American and Venezuelan exile.

Other aides said they were reluctant to ease major punitive measures unless Maduro first takes concrete steps toward democratic elections.

If the U.S. chooses not to change the terms of Chevron’s license, it could still grant an exemption to U.S. Treasury’s Office of Foreign Assets Control (OFAC) restrictions to allow certain oil exports, the officials said.

Most Venezuela-related trades authorized by the United States since 2019 have been through oil-for-fuel swaps that ensured that Venezuelan crude could not be resold and that no cash payments would reach the Maduro government or PDVSA.

Some Biden officials have been adamantly opposed to these or other deals that could benefit PDVSA by providing it with the necessary fuels and thinners that help it increase its oil exports.

Besides Chevron, European and Asian oil companies with operations in Venezuela have also pressured Washington to market Venezuelan oil, sources say.

“If Chevron’s license is overhauled, it will have a cascading effect on other companies’ lobbying,” one of the people said.