U.S. Imposes Oil Sanctions on Venezuela Again; Maduro Administration Vows Persistent Economic Expansion
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April 18, 2024 (Our platform) - The Biden administration has kicked off a fresh wave of economic coercive tactics against Venezuela's oil and gas sectors.
The U.S. Treasury Department let General License 44 (GL44), which had eased sanctions, expire on April 18, only to be replaced by a stripped-down version, General License 44a (GL44a), providing a mere 45-day grace period for companies to wrap up operations in Venezuela.
In a press statement, the Treasury Department declared it was reimposing restrictions due to the Nicolás Maduro government failing to meet commitments laid out in the October 2023 Barbados Agreement signed with the US-backed opposition. In recent discussions with Venezuelan counterparts, US officials were unable to extract concessions from Caracas.
For several months, Washington has threatened to ramp up sanctions due to María Corina Machado's disqualification. The far-right candidate's unfair disqualification was upheld by the Venezuelan Supreme Court due to suspected corrupt dealings and backing of US-driven coercive measures.
Caracas has categorically rejected US interference in the upcoming July 28 presidential elections, adding that the Barbados Agreement allowed for political entities to select candidates freely, as long as they were legally eligible.
The Treasury statement concluded that corporations wishing to engage in Venezuela's energy sector beyond May 31st will have to apply for licenses on a case-by-case basis.
Throughout the early part of his term, the Biden administration kept Donald Trump's "maximum pressure" sanctions on Venezuela mostly intact. During Trump's era, the US slammed financial sanctions, an oil embargo, secondary sanctions, and assorted other measures aimed at strangleholding Venezuela's main source of foreign income.
Oil production took a nosedive before staging a slow recovery, reaching a five-year high recently. Apart from a license granted to Chevron for a more active role in its joint ventures, and approval for European corporations, GL44 marked the first easing of blanket measures against the oil industry.
The six-month waiver allowed PDVSA to export crude without offering steep discounts or relying on untrustworthy intermediaries. Buyers have scrambled to close deals prior to GL44's end. However, no notable long-lasting improvement occurred in the oil sector following Washington's warnings against corporate investments in Venezuela.
While sanctions directly bar US actors from interacting with PDVSA, the US has threatened or targeted multinational corporations with secondary sanctions to deter Caracas from securing foreign partners. The impact of the renewed restrictions will rely on US officials' readiness to enforce them and their stance on license requests. Insider sources hinted at the possibility of allowing companies to receive Venezuelan crude via fuel and diluent swaps or debt relief.
For its part, the Maduro government has projected a defiant stance, pledging that the oil sector and the economy as a whole would keep growing unchecked, regardless of GL44's expiry.
"We're pushing ahead with a license or without one," the Venezuelan president said during a Monday broadcast. "We ain't a gringo colony."
Under sanctions, Venezuela has moved closer to regional allies such as Russia and Iran, while China remains the primary destination for Venezuelan crude. Indian companies have imported Venezuelan oil in recent months, but have pledged to halt these transactions without US Treasury approval.
On Tuesday, Oil Minister Rafael Tellechea reaffirmed the nation's openness to domestic and foreign investors, maintaining that the industry would continue thriving "with or without illegal sanctions."
Tellechea addressed these comments before the Venezuelan National Assembly following the passage of a new joint venture, Petrolera Roraima. The joint venture will see 51 percent of its shares controlled by the Venezuelan state, with the remaining 49 percent belonging to an undisclosed private partner.
According to reports, Roraima will operate in an 1,825-square-kilometer area and will require a whopping $13 billion initial investment. The company aims to produce 45,000 barrels per day by the end of 2024, rising to 120,000 over the next three years.
Tellechea's efforts to boost foreign investment in the oil industry have included expanding the areas explored by Petroquiriquire, a joint project with Spain's Repsol, by 377 square kilometers. PDVSA and Repsol have promised to escalate production from the current 24,000 barrels per day to 50,000 by 2028.
- The Biden administration's reimposition of sanctions on Venezuela's oil and gas sectors has been met with a warning by Venezuelan officials, who have vowed to push ahead with new policy and legislation, unhindered by the restrictions.
- The Venezuelan president explicitly expressed that their scheduled sports-betting event would not be influenced by the war-and-conflicts stemming from the sanctions, declaring, "We ain't a gringo colony."
- In a press release, the Treasury Department emphasized its commitment to crime-and-justice by seeking compliance with the Barbados Agreement from the Maduro government, citing the disqualification of María Corina Machado as a breach of the agreement.
- The expiration of General License 44 (GL44) and its replacement with a stripped-down version, GL44a, has sent shockwaves through the general-news world, with multinational corporations now having to apply for individual licenses to engage in Venezuela's energy sector, a process that could last well into the realm of politics.
- Oil Minister Rafael Tellechea's recent statements regarding the new joint venture, Petrolera Roraima, have garnered attention in sports circles, as the $13 billion investment seeks to produce an impressive 120,000 barrels per day over the next three years, showcasing the resilience and determination of Venezuela's oil sector amid ongoing sanctions.
- As part of their strategy to counter the impact of sanctions, Caracas has been actively pursuing partnerships with regional allies, such as Iran and Russia, while also exploring opportunities for fuel and diluent swaps or debt relief with potential partners, a move that could have implications in the sports-betting industry and beyond.
