Temporary relief of sanctions against Venezuela's oil sector should not be seen as encouragement to resume full operations in that country, US sanctions enforcers say, as oil companies can choose to have a more limited footprint.
The US administration last month issued a waiver from its sanctions that have been in effect since 2019, giving foreign oil producers and service providers permission to resume full cooperation with state-owned PdV. The waiver is in effect until 18 April 2024, and its future extension is tied to specific political conditions that Caracas will have to meet.
The Treasury Department today separately renewed a waiver for oilfield services companies Halliburton, SLB, Baker Hughes and Weatherford for limited maintenance of operations in Venezuela, valid until 16 May 2024. The waiver's terms are similar to those issued during the four-year period when the US was enforcing its sanctions against Venezuela more rigorously.
US and other companies are not obligated to operate under the more permissive sanctions relief regime authorized on 18 October, Treasury's guidance said. Continuing sanctions relief depends on whether the government of President Nicolas Maduro implements concrete steps toward a democratic presidential election by the end of 2024, Treasury said.
The guidance is the second reminder from the US administration against assuming that sanctions against Venezuela have been permanently lifted. The US could start reimposing oil-focused sanctions on Venezuela if the country does not move toward commitments for free elections and release more political prisoners by 30 November, a US official said earlier this month.
SLB is ready to get back to work in Venezuela, chief executive Olivier Le Peuch said last month. The other three large service companies have not publicly commented on the prospect.
Producers that are not already up and running in Venezuela may be reluctant to make significant investments, given the uncertainty as to whether the sanctions relief will be extended in April. In practice, foreign producers — which already had separate licenses to maintain limited operations in Venezuela, including Chevron, Italy's Eni and Spain's Repsol — may be best positioned to take advantage of the thaw in US-Venezuela relations.
The easing of sanctions could see Venezuela's production increasing by 200,000 b/d — from about 800,000 b/d currently — but further gains may be harder.
