By Marianna Parraga, Humeyra Pamuk and Matt Spetalnick
(Reuters) – The U.S. government is preparing to take new measures next week to suppress Venezuelan oil exports, including a plan not to renew Chevron Corp (N 🙂 license to do business with the state-owned company PDVSA, according to sources familiar with the matter.
The United States imposed harsh sanctions on Venezuela in early 2019 to oust socialist President Nicolas Maduro, whose re-election in 2018 was considered by most western countries to be fraudulent.
Venezuela's oil exports have dropped by a third since then, but more than a year later, Maduro remains in power, supported by the Venezuelan military, Russia, China and Cuba.
The Trump administration has been frustrated with the takeover of the socialist leader and has increased pressure on the Venezuelan oil industry in recent weeks.
The U.S. Treasury Department blacklisted Geneva-based Rosneft Trading, a unit of Russian oil giant Rosneft (MM :), to do business with PDVSA last month, and global energy companies warned that further action would be taken become.
US officials are now targeting oil-for-fuel swaps and oil loan repayments, threatening to close the last areas open by the government to companies still dealing with PDVSA.
According to sources who spoke on condition of anonymity, Washington has already advised some PDVSA customers to stop exchanging oil for fuel if they want to fully comply with new sanctions. Companies that use Venezuelan oil to repay debt may also have to stop these transactions.
A 90-day grace period set by Washington to process foreign purchases of Venezuelan oil ends on May 20.
"The United States is asking us to pursue a policy that does not run out of Venezuelan crude oil or fuel, so the swaps previously allowed should end by the deadline," said a senior executive at a PDVSA customer.
One source said the measures are expected to come late next week, but another warned that a final announcement could be a few weeks away.
Chevron is the largest US company still operating in the country with a waiver that allows it to continue producing oil with PDVSA in several joint ventures and also to trade loads of Venezuelan crude oil in international markets. The license expires in April.
Chevron spokesman Ray Fohr said the company was "hopeful" that its license could be renewed.
PDVSA and the White House did not immediately respond to requests for comments. US Special Envoy for Venezuela Elliott Abrams declined to comment. The U.S. Treasury Department said no more than repeatedly that the license expires on April 22.
"Chevron has a positive presence in Venezuela," said Fohr. The company's share of production from its joint ventures with PDVSA averaged 35,300 barrels of oil equivalent per day in 2019, which is approximately 6% of the country's total production.
"If Chevron is forced to leave Venezuela, non-US companies will fill the gap and oil production will continue," he said.
Senior officials from the State Department had initially spoken out against the cancellation of the Chevron license, but the White House supported the idea of taking action, one source told Reuters.
Buyers in China, India and Europe continued to import after the sanctions last year, so Venezuela's oil exports did not decrease as much as some US officials had expected. Washington recently said it will look for customers in Asia and intermediaries who have helped hide the crude oil's origins.
Large Indian refineries in recent days Reliance Industries (NS 🙂 and Nayara Energy planned to reduce their purchases of Venezuelan oil from next month.
The United States recognized Venezuelan opposition leader Juan Guaido as a legitimate interim president of OPEC in January 2019. Maduro released Guaido as a puppet from the United States.