US warns oil companies active in Venezuela: Update

Market: Crude oil
05/02/20

Updates with changes throughout

The US administration says it is considering further sanctions against Venezuela's oil sector that would affect the ability of Chevron and foreign oil companies to continue their operations in that country.

"Absolutely everything is an option with regards to pressure" on Venezuela, a senior administration official said today. The US is particularly concerned about Venezuela's continuing dependence on Russia's state-controlled Rosneft to export crude.

"Whether it is Rosneft, Reliance, Repsol or Chevron here in the US, I would tread cautiously toward their activities in Venezuela that are in support indirectly or directly of the Maduro dictatorship," the official said. "We are halfway through our maximum pressure campaign, and we are only moving in one direction, and that is forward. And their activities are clearly of concern."

The US will implement "some impactful measures within the next 30 days," including sanctions, the official said.

Rosneft is the main foreign lifter of Venezuelan crude, supplying India's Reliance Industries and Indian firm Nayara's refining system, which it partly owns. Spain's Repsol takes oil in lieu of cash payment for its operations in Venezuela.

Chevron, which last month renewed its authorization from the US Treasury Department to continue operating in Venezuela through 22 April, last month started lifting Hamaca synthetic crude after its PetroPiar joint venture with PdV resumed upgrading Orinoco extra-heavy crude.

Chevron declined to comment. The US administration said its previous waivers for Chevron were needed to preserve Venezuela's ailing oil industry for a future democratic government.

"We have been hanging on in Venezuela, which has tremendous potential, and our capability to help, over time, develop that resource in a responsible way is something that is differentiated," Chevron chief executive Mike Wirth said last week. But he added that it was "really hard to say how things will go in Venezuela."

PdV's partnership with foreign companies helped stabilize production and exports late last year despite the imposition of US sanctions in January 2019 that cut off the flow of Venezuelan oil to US refiners. But a recent resurgence of inventory and export bottlenecks aggravated by US sanctions has forced PdV and its foreign partners to shut in some crude production.

The US official made the remarks hours before President Donald Trump hosted Venezuelan opposition leader Juan Guaido at the White House. The US recognizes Guaido as the country's interim president and holds that the National Assembly, which Guaido heads, is the only legitimate authority in Venezuela.

The meeting with Trump and an invitation to be a guest of honor at the State of the Union address to Congress yesterday were organized to dismiss speculation about the US' continued support for Guaido, the US official said. "It has actually been fun watching, in the last couple of weeks, a lot of people in the media writing Juan Guaido's political obituary because, you know, somehow he had gotten snubbed by President Trump," the official said.

But the White House, without explanation, canceled a planned joint press availability in the Oval Office before the meeting started.Guiado separately met with vice president Mike Pence and Florida's Republican senators Rick Scott and Marco Rubio.

The US administration is also keen to demonstrate that its year-long campaign to effect a change of government in Venezuela will continue even though President Nicolas Maduro retains control of the government and armed forces.

Guaido potentially faces arrest upon his return, as the Maduro government says he is forbidden from leaving the country. The US administration threatened unspecified consequences for the Maduro government if it carries out its threat.

By Haik Gugarats

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21/11/24

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21/11/24

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21/11/24

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