(Bloomberg) – Trafigura Group and other traders will hold talks with the U.S. government about how they can return to buying crude from Venezuela and supplying fuel to the country after the removal of President Nicolás Maduro over the weekend, said the firm’s global head of oil.
“It’s the topic everyone’s discussing in the oil industry,” Ben Luckock said. “I think everyone is looking at what opportunities there may be in Venezuela.”
President Donald Trump ouster of Maduro has begun what has been described as a “gold rush” to reforge business ties with Venezuela’s oil industry. The country has the world’s largest oil reserves, but its production has slumped after decades of underinvestment, trade sanctions and growing economic isolation.
Trafigura is one of the world’s biggest traders of oil, moving an average of 6.6 MMbpd. It and other traders have historically done business with Venezuela’s state oil producer PDVSA, purchasing its crude and supplying refined products to the country.
More recently traders have needed permits from the U.S. Treasury’s Office of Foreign Assets Control to buy and sell Venezuelan oil. Luckock said Trafigura would need to see a “proper legal framework” in place before returning but that the firm had had “ongoing discussions with this administration and other governments about what’s required.”
“It’s very clear the U.S. government wants the oil to continue to flow,” he said. “They don’t want civil unrest in Venezuela and want gasoline and diesel to enter the country and we’re well placed to assist if in fact that’s what’s required.”
OPEC member Venezuela holds the world’s biggest oil reserves, but production there has declined as the industry experienced decades of neglect. Since Maduro’s ouster U.S. politicians have discussed the potential for investments that might help revive the sector.
Venezuela will probably add very few barrels to the market this year, and it’s unclear how bad a state the country’s infrastructure is in, Luckock said. Still, the ouster of Maduro has reduced the chance of a hit to supply from a prolonged conflict in the country, he added.
Returning the country to its previous production level of 3 MMbpd of will take years and hundreds of billions of dollars.
“You don’t just click your fingers and change this,” Luckock said.
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