(Investing) – U.S. oil producer Chevron Corp (NYSE:) and several European companies are in talks with the Trump administration to obtain authorizations to keep their stakes in joint ventures with Venezuela’s state-run PDVSA, three sources close to the matter said.
Washington in March revoked licenses and authorizations it had granted in recent years that allowed PDVSA’s foreign partners and customers to do business with Venezuela, which is under U.S. sanctions, and export oil to destinations including the U.S., Europe and India.
The U.S. gave the companies until May 27 to wind down transactions, but did not rule specifically on what they should do with employees and assets in Venezuela, including joint venture stakes.
Lawyers and experts have said more clarity is needed to complete the closure of those activities. PDVSA has in the meantime only been delivering oil to customers who prepay or agree to swaps, and in April canceled a handful of crude cargoes to Chevron amid payment uncertainty.
Last week, the U.S. Treasury Department let a separate license for U.S. oil service firms to keep equipment in Venezuela expire.
Several oil companies are now requesting the U.S. to allow them to at least return to the type of license they had between 2020 and 2022, which prevented them from expanding operations in Venezuela or exporting oil, but allowed them to preserve their stakes, offices and a minimum presence in the South American nation, the sources said. They spoke on condition of anonymity because they were not authorized to speak publicly.
This alternative would avoid an exodus of foreign companies from Venezuela, but could lead to PDVSA again accumulating debt and owing more dividends to the companies, as it plans to take over operations previously controlled by the joint ventures and handle exports by itself.
Venezuelan oil production has declined sharply in the last decade due to lack of investment, mismanagement and sanctions, but the country still holds the world’s largest crude reserves.
Repsol (OTC:) CEO Josu Jon Imaz said last month the Spanish company was in talks with U.S. authorities about ways to keep activities in Venezuela.
Chevron CEO Mike Wirth said on the company’s earnings call this month that it was in dialogue with the U.S. government on how its license could be modified or extended.
Neither CEO disclosed specifics of his request.
PDVSA, Venezuela’s Oil Ministry and the U.S. Treasury did not reply to requests for comment. A Chevron spokesperson referred to Wirth’s recent public comments on the matter.
LAST U.S. OIL COMPANY IN VENEZUELA
Following PDVSA’s cargo cancellations last month, Chevron has taken small steps to reduce operations in Venezuela, where it is the minority stakeholder of four joint ventures controlled by the state firm.
PDVSA briefly suspended production in April at a joint oil upgrader, Petropiar, to reorganize operations aimed at supplying more feedstock to domestic refineries. Chevron, meanwhile, has diverted tankers that had been exclusively carrying Venezuela crude to handle other business.
About 300 contractors are linked directly and indirectly to Chevron’s projects with PDVSA, which are responsible for about a quarter of Venezuela’s 1-million-barrel-per-day oil output. The company had hired new staff in recent years.
Chevron has not given up on its efforts to convince President Donald Trump’s administration that having a presence in the OPEC country and exporting its oil is important for U.S. energy security.
“We are the only American company that remains on the ground in Venezuela,” Wirth said in a television interview this month. “If we were to leave as others have, the oil production continues and American companies are replaced by companies from other countries,” including China and Russia, he said.
When the previous Biden administration granted it a broad license in 2022, Chevron was owed $3 billion by PDVSA, accumulated from the previous period when the U.S. company was blocked from having access to proceeds in Venezuela. The export mechanism in the authorization has allowed the firm to recover almost the entire amount, but some dividend payments are still pending from PDVSA, one of the sources said.
The government of President Nicolas Maduro has fiercely rejected the U.S. sanctions, which have been hardened by Trump amid his criticism about elections the U.S. says were rigged, as well as migration. Venezuela has said the measures amount to an “economic war,” while some of its key partners, including China, have expressed similar opinions.
