US Allows Oil Majors to Broadly Operate in Venezuela, New Energy Investments

Venezuela’s interim President Delcy Rodriguez, U.S. Energy Secretary Chris Wright and U.S. Charge d’Affaires for Venezuela Laura Dogu visit oil production facilities at the joint venture between Chevron and state oil company PDVSA in the Orinoco Oil Belt

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Oil majors with offices in Venezuela granted general license
New investments in oil and gas allowed, but contingent on separate permits
Biggest relaxation of sanctions since US captured Maduro
Oil major royalty payments must go through US-controlled deposit fund

WASHINGTON, Feb 13 (Reuters) – The U.S. eased sanctions on Venezuela’s energy sector on Friday, issuing two general licenses that allow global energy companies to operate oil and gas projects in the OPEC member and for other companies to negotiate contracts to bring in fresh investments.

The Treasury Department’s Office of Foreign Assets Control issued a general license allowing Chevron (CVX.N), BP (BP.L), Eni (ENI.MI), Shell (SHEL.L) and Repsol (REP.MC) to operate oil and gas operations in Venezuela. Those companies still have offices in the country and stakes in projects, and are among the main partners of state-run company PDVSA.

The authorization for the oil majors’ operations requires payments for royalties and Venezuelan taxes to go through the U.S.-controlled Foreign Government Deposit Fund.

The other license allows companies around the world to enter contracts with PDVSA for new investments in Venezuelan oil and gas. The contracts are contingent on separate permits from OFAC.

The authorization does not allow transactions with companies in Russia, Iran, or China or entities owned or controlled by joint ventures with people in those countries.

The move was the biggest relaxation of sanctions on Venezuela since U.S. forces captured and removed President Nicolas Maduro last month.

OIL LAW REFORM

The U.S. licenses follow a sweeping reform of Venezuela’s main oil law approved last month, which grants autonomy for foreign oil and gas producers to operate, export and cash sale proceeds under existing joint ventures with PDVSA or through a new production-sharing contract model.

The U.S. has had sanctions on Venezuela since 2019 when President Donald Trump imposed them during his first administration.

Trump is now seeking $100 billion in investments by energy companies in Venezuela’s oil and gas sector. U.S. Energy Secretary Chris Wright said on Thursday, during his second day of a trip to Venezuela, that oil sales from the country since Maduro’s capture have hit $1 billion and would hit another $5 billion in months.

Wright said the U.S. will control the proceeds from the sales until Venezuela stands up a “representative government.”

Since last month, the Treasury issued several other general licenses to facilitate oil exports, storage, imports and sales from Venezuela. It also authorized the provision of U.S. goods, technology, software or services for the exploration, development or production of oil and gas in Venezuela.

The Venezuelan government expropriated assets of Exxon Mobil (XOM.N) and ConocoPhillips (COP.N) in 2007 under then-President Hugo Chavez. The Trump administration is trying to get those companies to invest in Venezuela as well. At a meeting at

the White House with Trump last month, Exxon Mobil CEO Darren Woods said Venezuela was “uninvestable” at the moment.

Wright said on Thursday that Exxon, which no longer has an office in Venezuela, is in talks with the government there and gathering data about the oil sector. Exxon did not immediately comment.

Reporting by Timothy Gardner; additional reporting by Marianna Parraga in Houston, Editing by Nia Williams, William Maclean