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US reimposes Venezuela oil sanctions

  • Market: Crude oil
  • 17/04/24

The US administration today reimposed sanctions targeting Venezuela's oil exports and energy sector investments and set a deadline of 31 May for most foreign companies to wind down business with state-owned PdV.

The US decision rescinds a sanctions waiver issued last October, which allowed Venezuela to sell oil freely to any buyer and to invite foreign investment in the country's energy sector. The waiver, which was due to expire on 18 April, was tied to Caracas' agreement to hold a competitive presidential election and to allow opposition politicians to contest it.

Venezuelan president Nicolas Maduro's government reneged on that deal by refusing to register leading opposition candidate Maria Corina Machado or an alternative candidate designated by her, a senior US official said. The US considered the potential effects on global energy markets and other factors in its decision, but "fundamentally, the decision was based on the actions and non-actions of the Venezuelan authorities," the official said.

The separate waivers granted to Chevron and to oil field service companies Halliburton, SLB, Baker Hughes and Weatherford will remain in place. Chevron will be allowed to continue lifting oil from its joint venture with PdV, solely for imports into the US.

US-bound Venezuelan crude volumes averaged 133,000 b/d last year. Chevron said its Venezuela output was 150,000 b/d at the end of 2023. Argus estimated Venezuela's crude output at 850,000 b/d in March, up by 150,000 b/d on the year.

PdV said it will seek to change terms of its nine active joint ventures, starting with Spain's Repsol, in an effort to boost production.

The reimposition of sanctions will primarily affect Venezuelan exports to India and China. India has emerged as a major new destination for Venezuelan crude since the US lifted sanctions in October, importing 152,000 b/d in March. There are two more Venezuelan cargoes heading to India and are expected to arrive before the 31 May deadline. The VLCC Caspar left the Jose terminal on 14 March and was expected to arrive at a yet-unknown west coast Indian port on 26 April. The Suezmax Tinos left Venezuela on 18 March and was due at Sikka on 30 April.

By contrast, Chinese imports of Venezuelan Merey, often labeled as Malaysian diluted bitumen, have been lower since October. Independent refiners in Shandong, which benefited from wide discounts on the sanctioned Venezuelan crude, cut back imports to just a fraction of pre-relief levels. By contrast, state-controlled PetroChina was able to resume imports. The Merey discount to Brent already widened in anticipation of a possible reimposition of US sanctions.

Reprieve expected for European companies

Separate US authorizations previously issued to Repsol and to Italy's Eni to allow oil-for-debt deals with PdV and to enable a Shell project to import natural gas from Venezuela's Dragon field to Trinidad and Tobago are expected to remain in place.

The US sanctions enforcers as a rule do not disclose the terms of private sanctions licenses, and the European companies were not immediately available to comment. The US would still consider future requests for sanctions waivers for specific energy projects, another senior official said.

Repsol imported 23,000 b/d of Venezuelan crude into Spain last year and 29,000 b/d so far this year, according to Vortexa data. The last cargo to arrive was on 15 April.

Hope springs eternal

The US administration says it will consider lifting the sanctions again if Maduro's government allows opposition candidates to participate in the July presidential election.

The US action today "should not be viewed as a final decision that we no longer believe Venezuela can hold competitive and inclusive elections," a third senior official said. "We will continue to engage with all stakeholders, including Maduro representatives, the democratic opposition, civil society and the international community to support the Venezuelan people's efforts to ensure a better future for Venezuela."

Chinese imports of Venezuelan crude

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26/02/25

BP raises oil and gas output goal in strategy reset

BP raises oil and gas output goal in strategy reset

London, 26 February (Argus) — BP has raised its 2030 target for oil and gas production to 2.3mn-2.5mn b/d of oil equivalent (boe/d) as part of a "fundamental reset" of its strategy that also entails a cut in its renewable energy investments. The 2.3mn-2.5mn boe/d goal leaves little scope for substantial output growth given that BP produced 2.36mn boe/d last year. But it is a stark change from the company's previous target to reduce production to 2mn boe/d by 2030. BP intends to dial down its overall capital expenditure (capex) to $13bn-15bn/yr through to 2027 and to sell $20bn of assets during that time to help strengthen its balance sheet. Its previous plan was to spend $14bn-18bn/yr in 2024-30. The capex cut will be driven by lower spending on renewables, while investment on oil and gas is targeted at $10bn/yr, a slight increase on the $9.8bn it spent last year. BP plans to launch 10 major new upstream projects by the end of 2027, with a further 8-10 starting up by the end of 2030. It also plans to strengthen its upstream portfolio by "reloading [its] exploration hopper". BP expects investment in what it calls its "transition" businesses to be $1.5bn-$2.5bn/yr through to 2027 — around $5bn/yr lower than previous guidance. The company plans to make selective investments in biogas, biofuels and electric vehicle charging businesses and a more focused investment in hydrogen and carbon capture and storage (CCS) assets, alongside a capital-light partnership approach to renewable power. BP announced in December last year a new joint venture with Japanese utility Jera to house the two companies' offshore wind assets, saving it an estimated $4bn in capex until the end of the decade. Along with the higher oil and gas output target and the lower energy transition spend, BP has amended its emissions reduction goal. It now expects its scope 1 and 2 emissions to be 45pc-50pc lower in 2030 than in 2019. Previously, it was targeting a 50pc cut. Downstream assets will contribute to BP's $20bn divestment target. The company has already put its 257,800 b/d Gelsenkirchen refinery in Germany up for sale , it will carry out a strategic review of its Castrol global lubricants business and it plans to bring in a partner for its Lightsource BP solar business. BP expects proceeds from the divestment programme, savings from the reduced capex and the boost to cash flow from higher oil and gas production to help it cut its net debt to $14bn-$18bn by the end of 2027, from $23bn at the end of 2024. At the same time the company plans to allocate 30pc-40pc of its operating cash flow to shareholder returns, including a dividend that it sees increasing by more than 4pc/yr. Investment bank RBC Capital Markets noted that BP's new strategy is line with expectations. "To us, much of the release looks to be BP making the right calls for the long term, but it may not please investors today," the bank said. BP's share price was down by 0.9pc just before lunchtime in London. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Trump's Canada, Mexico tariffs deadline looms


25/02/25
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25/02/25

Trump's Canada, Mexico tariffs deadline looms

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Australia’s Woodside sees robust demand for LNG


25/02/25
News
25/02/25

Australia’s Woodside sees robust demand for LNG

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Reopening New Zealand refinery could cost $4bn: Study


25/02/25
News
25/02/25

Reopening New Zealand refinery could cost $4bn: Study

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Italy's Saipem to merge with Norway's Subsea 7


24/02/25
News
24/02/25

Italy's Saipem to merge with Norway's Subsea 7

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