January 28, 2023

U.S. to allow two companies to ship Venezuelan oil to Europe

Access road to Amuay refinery (Gate 1) in Judibana, Falcón State, Venezuela.
Credit – Yix, CC SA 4.0.

 Two companies could begin shipping Venezuelan oil to Europe as soon as next month to make up for Russian crude.

Five people familiar with the matter told Reuters that Italian oil company Eni SpA and Spain’s Repsol SA, are expected to begin importing Venezuelan crude oil as soon as July, as the continent continues to cut out Russian energy.

Washington’s green light to resume Venezuela’s long-frozen oil flows to Europe could provide a symbolic boost for Venezuelan President Nicolas Maduro. Venezuela has the world’s largest oil reserves, yet volumes are not expected to be large and any global oil-price impact will be modest, one of the sources told Reuters. 

The two companies have joint ventures with Venezuela’s state-run PDVSA. The cargoes can be counted toward unpaid debts and late dividends on the condition that they go to Europe, the source added, according to Bloomberg.

U.S. President Joe Biden’s administration hopes the Venezuelan crude can help Europe cut dependence on Russia and re-direct some of Venezuela’s cargoes from China. Coaxing Maduro into restarting political talks with Venezuela’s opposition is another aim, two of the people told Reuters.

Three other oil companies; U.S. oil major Chevron Corp, India’s Oil and Natural Gas Corp Ltd (ONGC), and France’s Maurel & Prom SA, had also lobbied the U.S. State Department and U.S. Treasury Department to take oil in return for billions of dollars in accumulated debts from Venezuela, reports the Regina Leader-Post.

All five oil companies halted swapping oil for debt in mid-2020 in the midst of former U.S. President Donald Trump’s “maximum pressure” campaign that cut Venezuela’s oil exports but failed to oust Maduro.

Last month, the Biden administration authorized Chevron, the largest U.S. oil company still operating in Venezuela, to talk to Maduro’s government and PDVSA about future operations in Venezuela.