Chevron Corp. has been given the green light by the Biden-led United States (US) administration to restart oil production in Venezuela, after an almost three-year ban on all drilling operations there.
Chevron got a six-month license, permitting it to produce crude oil and petroleum products at its Venezuela projects – the result of a resumption of talks between the top-ranking US and Venezuelan government officials.
Chevron has also been permitted to restart crude exports; all of which should go to the US. According to a Bloomberg article on Tuesday, the company is preparing to make its first shipment of crude to the US by late December.
Chevron will be allowed to import feedstocks from the US, according to the License on the Treasury Department’s Office of Foreign Assets Control’s website.
But no new drilling has been allowed. And the US has the power to scrap the agreement at any time. The authorisation specifically excludes the payment of taxes and royalties to the Venezuela government.
The new license will add little relief to the ongoing energy crisis caused by the Russian war in Ukraine but means a big step for Venezuela; its oil economy riddled with heavy US sanctions imposed by the Trump administration to oust President Nicolas Maduro.
Earlier in June, the Biden administration had eased some sanctions to allow oil shipments from Eni SpA and Spain’s Repsol to Europe to make up for Russian crude.
Venezuela’s oil industry seems to be on the rebound; soaring crude prices have seen Venezuela reaping major benefits for its economy; the country has managed to significantly boost its output – in fact, it has doubled over the past two years.
The Economic Commission for Latin America and the Caribbean’s (ECLAC) latest report lists Venezuela as the only other country behind Guyana with a high projected gross domestic product (GDP) rate for 2022. According to ECLAC, Venezuela is set to experience a GDP growth of 10%; Guyana’s GDP growth rate was set at 52%.