By Julie Turkewitz and Zolan Kanno-Youngs
The U.S. Treasury on Saturday granted Chevron a license for a limited expansion of energy operations in Venezuela, signaling the possible beginning of the country’s reentry into the international oil market. Foreign investment in the oil sector is something that Venezuela’s authoritarian president, Nicolás Maduro, desperately needs to improve the economy.
The license was issued in response to the resumption of talks between representatives of Maduro’s government and the Venezuelan opposition in Mexico on Saturday, after a stalemate that stretched more than a year. The two sides agreed that billions in government funds frozen abroad should be transferred to a humanitarian fund administered by the United Nations.
A senior Biden administration official described Saturday’s announcements as “important steps in the right direction” but added that there was “a long way” to go in resolving Venezuela’s complex economic, political and humanitarian crisis.
The deal is part of a shift in U.S. strategy on Venezuela that many analysts say has been accelerated by reduced global oil supplies as a result of the Russian invasion of Ukraine. Venezuela holds vast oil reserves, and its energy production potential has grown in global relevance amid the largest land war in Europe since World War II.
In a call with reporters Saturday, the senior U.S. official rejected the notion that the license had been issued to Chevron as a result of an increase in energy prices, saying it was part of an effort by the Biden administration to restore democracy to Venezuela.
The multibillion-dollar humanitarian agreement — a verbal accord that has not yet been signed by the Maduro government or the opposition — amounts to a concession by Maduro, who has long denied the scope of the humanitarian crisis that has been unfolding in Venezuela under his watch.
More than 7 million Venezuelans, one-fourth of the population, have fled to other nations. In recent months, a record number of Venezuelans have arrived at the U.S. border, seeking new lives.
The Chevron deal is limited in scope. It is good for six months and must be renewed after that. The agreement leaves space for the United States to revoke it if Maduro does not follow through on the humanitarian or other commitments — or to offer him future concessions if he does.
The Biden administration is also calling on Maduro to allow the United Nations to have unfettered access to Venezuela to write and publish assessments on the progress of the new humanitarian agreement.
In granting this license, the United States “is still holding on to plenty of leverage for future talks,” said Geoff Ramsey, director of the Venezuela program at the Washington Office on Latin America.
The Chevron deal would allow the company to expand operations at a few projects it already runs with Venezuela’s state oil company, PDVSA, and to import Venezuelan oil to the United States. It specifically states that the oil company is prohibited from paying any taxes or royalties to the government of Venezuela. Instead, according to the Biden administration official, profits earned will go toward the repayment of government debt to Chevron.
In an email, a Chevron spokesperson, Ray Fohr, said the company was “determined to remain a constructive presence in the country.”
Venezuela was once an affluent nation, its economy flush with oil money. But Maduro and his predecessor, Hugo Chávez — two leaders claiming socialist ideals — plunged the economy into disarray while destroying its democratic institutions.
During the Trump years, the administration tried to weaken Maduro through sanctions and isolation. The Biden administration has opted for more engagement.
Maduro’s larger goal is for Washington to lift all U.S. sanctions, allowing him to engage with the global economy, rebuild Venezuela’s dilapidated energy sector and restore its enfeebled economy.
Washington’s ultimate goal — and that of the otherwise often-fractured Venezuelan opposition — is to push Maduro toward setting free and fair conditions for the 2024 presidential election. In the past, Maduro has controlled elections by barring many opposition leaders, jailing others and co-opting political parties.
Francisco Monaldi, director of the Latin America Energy Program at Rice University, said the Chevron deal was not just symbolic. Within two years, the company could be producing more than 200,000 barrels a day in Venezuela, adding to the approximately 765,000 barrels now pumped daily, according to Argus, an industry monitor.
The issue to watch going forward, he added, is whether other companies will be able to use the Chevron deal to pressure Washington into lifting further sanctions against Venezuela.
Current U.S. rules prohibit both American and foreign companies from buying Venezuelan oil. But entities such as Repsol in Spain and Reliance in India have lobbied Washington for sanctions relief for years, Monaldi said.
“It’s very hard to justify — for the U.S. to tell India not to buy Venezuelan oil when they are buying Venezuelan oil,” he said.
Although the multibillion-dollar humanitarian-aid deal still needs to be finalized, the Venezuelan government and opposition on Saturday signed an accord laying out the framework for monitoring that future program. Norway will facilitate that monitoring process.
In a presentation to the news media, Dag Nylander, head of the Norwegian delegation at the meeting in Mexico, said that the aid program would work to improve the country’s public health system, its national electricity system and its public education system, and that it would address problems caused by torrential rains this year.