The Biden administration has been courting Venezuela since the Russian invasion of Ukraine, hoping to weaken its ties with Russia. Now the US has said it will ease sanctions to enable Venezuelan oil to flow to Europe to help those countries reduce their dependence on Russian oil.
According to Bloomberg, Italy’s Eni and Spain’s Repsol are the only major European oil producers with operations in the country. They are working with the Biden administration to divert Venezuelan oil bound for China to Europe.
Bloomberg also reported that Chevron is to be allowed to negotiate its licence with Venezuela’s oil company PDVSA to resume operations in the country. Several Venezuelans, including Carlos Erick Malpica Flores, a former PDVSA treasurer, will be removed from the US sanctions list.
Shipbroker Lorentzen & Co noted in a markets update: “In reality, little is known to what may come out of Chevron being allowed to try anew its terms with PDVSA, except that more drilling will not be allowed, nor the state-owned company’s revenues being boosted.”
Venezuela is endowed with the world’s largest proven oil reserves totalling about 300bn barrels, but is producing only 0.8m barrels per day according to the International Energy Agency, saying the country as for now holds no spare production capacity.
The Venezuelan news comes as many in the oil industry prepare for an easing of Iranian sanctions too.