The U.S. federal government will extend a sanction waiver allowing Chevron to keep doing business in Venezuela by another 60-days as negotiations with the Maduro government continue, Bloomberg has reported, citing an unnamed source familiar with developments.
The Trump admin in March gave Chevron a 30-day notice to wrap its business in Venezuela and leave, threatening to disrupt the supply of heavy crude for Gulf Coast refineries. Indeed, the decision initially affected Venezuelan crude oil exports, of which 240,000 barrels daily was going to Gulf Coast refineries.
The government realised this somewhat belatedly and granted Chevron a 60-day extension of the sanction waiver so it could continue producing oil in Venezuela and shipping it to U.S. refiners. Chevron has come to account for a fifth of Venezuela’s oil output.
Chevron also had big plans for its Venezuelan operations, aiming to boost exports from just one of them, Petropiar, by as much as 50% this year, to a total of 143,000 barrels daily. Now, these plans have a chance of materializing if Trump follows up on an idea of swapping more sanctions for tariffs and an extension of the supermajor’s license.
In a way, he has already followed up: in April, the U.S. president signed an executive order to impose secondary tariffs on any country that buys Venezuelan crude. The size of the tariff was quite substantial, at 25%. A lot of major oil importers said they would stop buying Venezuelan crude and yet flows abroad continued, even reduced.
Meanwhile, the Trump administration is engaged in ongoing negotiations with the Venezuelan government, focusing for the time being on the return of illegal immigrants to Venezuela. One recent development in this respect, per Bloomberg, may have signaled a marked improvement in bilateral relations that could have a positive effect on Chevron’s future plans for the South American country that boasts the world’s largest crude oil reserves.
By Irina Slav for Oilprice.com
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