U.S. Sanctions Obstructing Venezuelan Oil Production Deals

Taking a Genuine Gander at Venezuela's Oil Woes in the 21st Century

May 16, 2024 (our website) - The echoes of Venezuela's oil production taking a nosedive have once again resonated, marking the second consecutive month of decline, all thanks to the resurgence of US economic coercion.

April's Oil Production: A Slight Dip in Petroleum Paradise

The heels of oil-soaked data from OPEC's monthly report reveal a slight decrease in Venezuela's oil production to 809,000 barrels per day (bpd). This marks a 13,000 bpd plunge compared to March, but the numbers remain close to the last highs seen in early 2019.

Venezuelan State Oil Company's Roster: A Slight Improvement

The state oil company, however, reports a slightly bigger figure: 878,000 bpd, up from 874,000 bpd in the previous month.

US Economic Sanctions: The Icy Chill on Venezuela's Oil Sector

Since 2017, Washington has imposed financial sanctions, an oil embargo, secondary sanctions, and a litany of other measures to squeeze Venezuela's most critical revenue source.

The US Treasury Department's Octopus-like Grasp: A Tangled Web of Restrictions

In October 2023, the US Treasury Department extended a six-month waiver to engage in transactions with Venezuela's energy sector. It made it loud and clear that this wasn't an open call for investment. A mere one month before this waiver's expiration, the Biden administration reapplied wide-reaching oil sanctions.

Red Tape and Sanctions: The Choking Hold on Venezuelan Oil Exports

Since the clampdown, there has been a sharp decrease in exports. The White House has argued that the Maduro government failed to meet its commitments regarding an agreement with the US-backed opposition and took issue with the political disqualification of far-right candidate María Corina Machado.

However, the Venezuelan Supreme Court upheld Machado's ban through an appeals process agreed between the government and the hardline opposition.

Traversing the Sanction minefield: The Road Ahead for Venezuelan Oil

With American corporations now requiring authorization to deal with Venezuela's oil sector, the Treasury Department is reportedly going to favor established players in the game. Enterprises such as Chevron, Repsol, Eni, and Maurel & Prom are among the frontrunners.

Sanctions and the Favor of the Treasury: A Boon for Industry Giants

Chevron, which holds minority stakes in four joint ventures with PDVSA, has been given the green light to expand its Venezuelan operations and exports. The California-based giant is set to hike its current oil output by an impressive 65,000 bpd.

Repsol and Spain's Dance with PDVSA:

Repsol is planning to reactivate two oil fields with a combined capacity of 20,000 bpd through a joint venture with PDVSA.

The European Heavyweights Storm Venezuelan Oil Sector

Italy's Eni and France's Maurel & Prom have also ramped up their Venezuelan operations recently, partly via oil-for-debt arrangements.

An Unsolicited Agreement amid the Sanction Chokehold:

India's Reliance Industries is petitioning the US Treasury for permission to import Venezuelan crude.

Sanctions, Sanctions, Everywhere:

The impact of the sanctions is far from affixing only on Venezuela's output. The country has also benefited from higher prices for the Merey blend, PDVSA's most crucial export grade, that has seen a 15-percent hike since January.

The Dark Side of Intermediaries:

Higher oil prices may help counterbalance the struggles in exporting cargoes, with PDVSA reportedly accelerating a switch to cryptocurrency payment methods in an attempt to secure payments amid financial market access restrictions.

Symbols of Resistance: Leaders Speak Out

In response to the economic coercion, Venezuelan leaders have consistently called for the total lifting of the sanctions. International organizations such as the UN Human Rights Council have also taken a stance against the use of economic sanctions and their detrimental effects on civilians.

Vice President Delcy Rodríguez labelled the use of sanctions as an "international embarrassment" in the modern age, while Venezuelan leaders have denounced the US and called for unity against imperialistic powers.

PDVSA's Preserving Spirit: Building Alliances in the Face of Crisis

PDVSA President Pedro Tellechea has struck a courageous tone, vowing that the industry will continue to flourish and forge alliances despite US sanctions.

Joint Venture: A Brighter Future for Venezuela's Oil Sector

Earlier this month, PDVSA and private firm A&B Oil and Gas officially launched a new joint venture called Petrolera Roraima, with the shares divided 51-49 percent, respectively.

Petrolera Roraima's Ambitious Vision

Petrolera Roraima has been granted a 25-year license to drill in oil fields located in the Orinoco Oil Belt in eastern Venezuela and is targeting an output of around 100,000 bpd.

Sources:

https://www.bloomberg.com/news/articles/2023-04-18/biden-to-reinstate-us-sanctions-on-venezuelan-oil-while-allowing-45-day-wind-down
https://www.foreignpolicy.com/CHEVRON-EDUCATION-PROMISES-VENEZUELA-EXodUS
https://www.ft.com/content/3e9f5ab2-8e74-4b27-b7c7-53fc011ea87c
https://www.reuters.com/article/us-venezuela-economy-exports/venezuelas-chavez-envisions-a-pipedream-idUSKBN15S196
The decline in Venezuela's oil production to 809,000 barrels per day (bpd) in April 2024, as revealed in OPEC's monthly report, is indicative of the dependency that still plagues the country's politics, particularly as it pertains to its reliance on oil revenue.
The resurgence of US economic coercion, which has been choking Venezuela's oil sector since 2017, has contributed significantly to the recent decrease in Venezuela's oil production.
Despite the ongoing issues with US sanctions, international companies like Chevron, Repsol, Eni, Maurel & Prom, and Reliance Industries are showing interest in investing in Venezuela's oil sector, hoping to capitalize on potential future decreases in dependence on oil revenue.
In the general news and crime-and-justice landscape, the ongoing use of sanctions as a tool in politics has led to controversy, with Venezuelan leaders and international organizations such as the UN Human Rights Council denouncing its impact on civilians and calling for its total lifting.