Chevron in Talks with US for Expanded Venezuela Oil License

Summary

Expanded license would boost Chevron supply to own refineries
Chevron could sell Venezuelan oil to other refiners
Washington also wants Exxon, Conoco, Valero involved in Venezuelan oil exports

(Reuters) – Oil producer Chevron is in talks with the U.S. government to expand a key license to operate in Venezuela so it can increase crude exports to its own refineries and sell to other buyers, four sources close to the negotiations said on Wednesday.

The talks come as Washington and Caracas progress in talks to supply up to 50 million barrels of Venezuelan oil to the United States and President Donald Trump presses American oil companies to invest in the South American country’s energy sector.

Get the Latest US Focused Energy News Delivered to You! It’s FREE:

U.S. officials have said this week that proceeds from the Venezuelan oil supply, which is expected to help state energy company PDVSA drain inventories amid a severe oil blockade, will go to a U.S.-overseen trustee. Proceeds are meant to finance supplies of American goods to Venezuela.

Chevron is the only U.S. oil major operating in Venezuela, which it does under an authorization from the U.S. government that exempts it from sanctions on the country.

As part of its sanction-hardening campaign to weaken Venezuelan President Nicolas Maduro, the Trump administration in July put additional restrictions on Chevron’s license. Those restrictions reduced the volume of Venezuelan crude the company is exporting to the U.S. to some 100,000 barrels per day (bpd) in December from 250,000 bpd earlier this year.

The restrictions also deprived PDVSA of any proceeds from Chevron’s exports.

The license expansion would allow Chevron to go back to previous export levels while providing Venezuelan crude to business partners that could allocate the cargoes in destinations other than the U.S., as the company used to do in the past.

Some of those former business partners, including an Indian refiner, were this week making inquiries in Caracas about the possible resumption of oil loadings in Venezuela, two of the sources said.

Washington is also pushing to have other U.S. companies involved in oil exports from Venezuela, including refiner Valero Energy, which was a customer of state company PDVSA before sanctions, and majors Exxon Mobil and ConocoPhillips, whose Venezuelan assets were expropriated two decades ago, three separate industry sources said.

The possible participation of some of those companies has brought tension to the Caracas-Washington talks, three of the sources said.

Chevron, Valero, Exxon and Conoco did not immediately reply to requests for comment.

“While we do not comment on specific licenses or licensing requests, the United States Treasury is fully committed to supporting President Trump’s efforts on behalf of the people of Venezuela,” a department spokesperson said.

PDVSA said on Wednesday it was progressing in negotiations with the U.S. for oil exports to that country under terms similar to those in place for its partner Chevron.

“The process (…) is based on strictly commercial transactions under terms that are legal, transparent and beneficial for both parties,” it said in a statement, without providing further details.

A PDVSA board member separately said the company expects to sell its oil at market prices.

The U.S., which on Wednesday boarded and seized two Venezuela-linked tankers in the Atlantic Ocean, has said that an oil embargo on the country remains in force, with cargoes onboard U.S.-sanctioned vessels being targeted.

Reporting by Marianna Parraga; additional reporting by Sheila Dang, Daphne Psaledakis and Reuters Staff. Editing by Simon Webb and Anna Driver