Caracas, Washington in talks to export Venezuelan oil to US, sources say
Sign up now: Get ST's newsletters delivered to your inbox
Crude oil drips from a valve at an oil well operated by Venezuela's state oil company PDVSA.
PHOTO: REUTERS
Follow topic:
HOUSTON/WASHINGTON - Government officials in Caracas and Washington are discussing exporting Venezuelan crude to refiners in the United States
The talks are the first sign that the Venezuelan government is responding to President Donald Trump’s demand that they open up to US oil companies or risk more military intervention.
Mr Trump has said he wants interim President Delcy Rodriguez to give the US and private companies “total access” to Venezuela’s oil industry
Venezuela has millions of barrels of oil loaded on tankers and in storage tanks that it has been unable to ship due to a blockade on exports imposed by US President Donald Trump since mid-December.
The blockade was part of rising US pressure on the government of Venezuelan President Nicolas Maduro that culminated in US forces capturing him
Top Venezuelan officials have called Mr Maduro’s capture a kidnapping and accused the US of trying to steal the country’s vast oil reserves.
A potential deal to sell the trapped crude to the US could initially require reallocating cargoes originally bound for China, two sources said.
The Asian country has been Venezuela’s top buyer in the last decade and especially since the United States imposed sanctions on companies involved in oil trade with Venezuela in 2020.
“Trump wants this to happen early so he can say it is a big win,” said one of the oil industry sources.
The White House, Venezuelan government officials and PDVSA did not immediately comment.
Chevron in control of Venezuelan oil flows to US
The supply would increase the volume of Venezuelan oil exported to the US, a flow that is currently controlled entirely by Chevron, PDVSA’s main joint venture partner, under a US authorisation.
Chevron, which has been exporting between 100,000 and 150,000 barrels per day (bpd) of Venezuelan oil to the US, is the only company that has been loading and shipping crude without interruption from the South American country in recent weeks under the blockade.
It was not immediately clear how sanctioned PDVSA would obtain proceeds from the oil sales.
Sanctions mean the company is excluded from the global financial system, its bank accounts are frozen, and it is blocked from executing transactions in US dollars.
Ms Rodriguez, sworn in as interim president
Talks involve possible auctions with US buyers
The officials have been in talks this week about possible sales mechanisms, including auctions to allow interested US buyers to bid for cargoes, and issuing US licences to PDVSA’s business partners that could lead to supply contracts, two sources said.
Those licences have in the past allowed PDVSA’s joint venture partners and customers, including Chevron, India’s Reliance, China National Petroleum Corporation (CNPC) and European Eni and Repsol, to have access to Venezuelan oil to refine or to resell to third parties.
This week, some of those companies have begun making preparations for receiving Venezuelan cargoes again, two sources said.
The US and Venezuela have also discussed if Venezuelan oil can be used in the US Strategic Petroleum Reserve in the future, one of the sources said.
US Interior Secretary Doug Burgum said on Jan 6 that an increased flow of Venezuelan heavy oil to the US Gulf would be “great news” for job security, future petrol prices in the US and for Venezuela.
“Venezuela has an opportunity now to actually have capital come in and rebuild their economy and take advantage,” he told Fox News, when asked about this story on the talks between the governments on oil exports. “With American technology, American partnership, Venezuela can be transformed.”
US refineries on the Gulf Coast can process Venezuela’s heavy crude grades and were importing some 500,000 barrels per day (bpd) before Washington first imposed energy sanctions on Venezuela.
PDVSA has already had to cut production due to the embargo, because it is running out of storage for the oil.
If PDVSA does not find a way to export oil soon, it would have to cut production more, one of the sources said.
Oil traders reacted to news of the talks on Jan 6.
Differentials for some heavy oil grades in the US Gulf slipped around 50 cents per barrel on Jan 6 on the prospect of more Venezuelan supplies. REUTERS
