June 26, 2022

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Biden administration begins easing restrictions on Venezuelan oil

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The Biden administration has eased restrictions on the main U.S. oil company with assets in Venezuela in a gesture that senior administration officials said was intended to support talks between the government of President Nicolás Maduro and the U.S.-backed opposition.

The Treasury Department on Tuesday issued a “narrow” license to Chevron that will allow the company to begin previously prohibited talks with Venezuela’s socialist government over a possible restart of production that had ceased under U.S. sanctions, according to officials who spoke on the condition of anonymity under rules imposed by the White House.

The license is the first in what could be a series of steps toward oil sanctions relief, depending on the Maduro government’s cooperation, said officials who spoke on the condition of anonymity to discuss sensitive matters. If the government returns to negotiations with the opposition, aimed at guaranteeing free and fair elections in 2024, the United States could permit Chevron to begin shipping equipment to Venezuela. If the talks are successful, Chevron could be allowed to extract and sell Venezuelan oil.

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Opposition leaders on Tuesday night announced that they have begun “formal talks” with the Venezuelan government in order to return to the negotiation process in Mexico.

The Venezuelan government suspended talks in October after the extradition of a close Maduro ally to the United States. It was the fourth time in five years that the opposition had sought a deal with the regime.

Chevron did not respond to requests for comment.

The move is a notable shift in U.S. policy toward the authoritarian Maduro as the administration tries to drive a wedge between Venezuela and its close ally Russia, while also addressing soaring gas prices sent higher this year by the war in Ukraine. It follows a rare trip by U.S. officials to Maduro’s presidential palace in March to discuss energy sanctions and secure the release of two detained Americans.

Venezuela was once a significant supplier of crude to the United States before exports were hobbled by mismanagement under the governments of Hugo Chávez and Maduro and crippling sanctions imposed by Washington. Chevron is one of the few oil companies still in Venezuela, but U.S. restrictions have effectively frozen its operations in the country.

In 2020, the Treasury Department licensed Chevron and other companies to undertake only the preservation of their assets in Venezuela, while prohibiting production and interface with Venezuelan officials. Last year, the license was extended through June 2022.

Venezuelan Vice President Delcy Rodríguez confirmed Tuesday that the United States had authorized certain U.S. and European oil companies to negotiate with the government.

“Venezuela aspires that these decisions of the United States of America pave the way for the absolute lifting of the illegal sanctions that affect all of our people,” Rodríguez tweeted.

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The move faced swift pushback from U.S. lawmakers opposed to any deal that seems to reward Maduro, seen by Washington as illegitimate after he claimed reelection in a 2018 election widely viewed as fraudulent. Among them were Sen. Marco Rubio (R-Fla.) and Sen. Robert Menendez (D-N.J.), chairman of the Senate Foreign Relations Committee.

“Giving Maduro a handful of undeserved handouts just so his regime will promise to sit down at a negotiating table is a strategy destined to fail,” Menendez said in a statement. “The United States should only consider recalibrating sanctions in response to concrete steps in negotiations, not simply in response to cheap talk from a criminal dictator.”

The administration is pursuing the phased plan in an attempt to sidestep at least some of that criticism, according to a person familiar with the situation.

A senior administration official described the first phase as a “narrow license” that will “authorize Chevron to negotiate the terms of potential future activities in Venezuela.” It does not authorize entry into any agreement or any activity involving Venezuela’s state-owned oil company. It’s also “time limited” so officials can assess further steps “as we move forward.”

“Sanctions on the Maduro regime, for us, remain in place,” the official said. “We are going to continue to implement and enforce these sanctions.”

The administration is trying to take advantage of a closing window of opportunity in Latin America before midterm elections in November that could bring Republicans to power in Washington. A leftward shift across Latin America, which could continue in elections in Colombia and Brazil this year, is leaving the United States with fewer allies against Venezuela and Cuba. Both of the leading presidential candidates in Colombia, which is set to face a first-round vote next week, have discussed improving relations with neighboring Venezuela.

“I think it’s pretty clear that the Trump administration’s maximum-pressure policy has failed,” said Geoff Ramsey, a Venezuela analyst at the Washington Office on Latin America. “Countries across the hemisphere are looking for ways to respond to the Venezuelan crisis that matches the reality on the ground, which is that Maduro retains de facto control of the territory.”

On Monday, the administration announced it was lifting several Trump-era restrictions on Cuba, including a cap on remittances and a ban on flights outside Havana.

The White House is facing a potential embarrassment over the Summit of the Americas that President Biden is set to host next month in Los Angeles. Officials have said they do not want “nondemocratic” countries, including Cuba, Venezuela and Nicaragua, to attend. The presidents of Mexico, Bolivia, Honduras and several Caribbean states have said they will not attend if countries are excluded.

Senior administration officials say that invitations to the gathering, to begin June 6, still haven’t been issued and that final decisions had not been made.

The U.S. meeting with Maduro in March, a trip officials made without informing Venezuelan opposition leaders, frustrated key members of the opposition, regional allies and lawmakers in Washington. But opposition leaders now appear to support the Biden administration’s moves to ease restrictions.

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“It’s a different moment,” said one opposition leader, because Maduro’s government now has new incentives and pressures to get oil flowing back into the United States.

“We’re not expecting good faith from the dictatorship by any means,” the opposition leader said, speaking on the condition of anonymity to discuss sensitive matters. “We’re hoping that with the tools that we have, we can reach an agreement, understanding the different situation Maduro and his regime face today.”

A person familiar with the Maduro government’s thinking said Caracas was prepared to return to the Mexico City dialogue and had high hopes that Chevron would be able to resume operations, which would then open a door to further deals with U.S. oil interests.

“They have their Mickey Mouse hats on now,” the person said, also speaking on the condition of anonymity to discuss sensitive issues. “Right now, they’re very pro-American and ready to talk. … They see themselves making a lot more money if they can sell their oil in Corpus Christi [in Texas] instead of the other side of the world. That’s what they want to see.”

Ana Vanessa Herrero in Caracas contributed to this report.

https://www.washingtonpost.com/world/2022/05/17/venezuela-oil-sanctions-chevron/

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