Venezuela prepares olive branch as US reviews sanctions

  • Market: Crude oil, Oil products
  • 02/11/21

Venezuela's government is cautiously preparing some conciliatory gestures as part of a strategy to clean up its international image and persuade the new US administration to ease sanctions.

A Venezuelan court this week ordered that criminal trials must begin promptly for former oil minister and state-owned PdV chief executive Eulogio Del Pino and four other senior oil executives who were arrested in late 2017 on charges of alleged corruption.

Venezuela's justice system, as with all other official institutions and governing branches, is controlled by President Nicolas Maduro's administration, the target of US financial sanctions since August 2017 and oil sanctions since January 2019.

Although there is no sign that the men would escape conviction, they could be shifted to house arrest. At least one of them is believed to have health problems.

The court trials were announced toward the end of a visit by a UN Special Rapporteur on human rights and unilateral coercive measures, Alena Douhan, who arrived in Venezuela on 1 February and is scheduled to depart tomorrow.

Meanwhile in Washington, President Joe Biden's administration is weighing adjustments to the sanctions — including a restoration of crude-for-diesel swaps by non-US companies and more flexible operating terms for Chevron and US oil service companies — as a way to alleviate Venezuela's humanitarian plight, particularly in light of the Covid-19 pandemic.

Maduro and his inner circle "are trying to whitewash their image. But they have no credibility," a former senior PdV official close to the five men tells Argus.

One of the Venezuelan national oil industry's last veteran managers, Del Pino was hard-pressed to balance the need for extensive foreign investment with the government's nationalist inclinations.

Del Pino and Nelson Martinez, who also served as oil minister and PdV chief executive as well as head of PdV's US refining unit Citgo, were arrested in pre-dawn raids in November 2017. Martinez died in custody just over a year later.

The other men that the 10th court of control in Caracas ordered to trial are former PdV western division manager Gustavo Malave, former PdV joint venture subsidiary CVP president Orlando Chacin and western division security chiefs Henry Sanchez and Adolfo Torres.

The arrests of the five men took place during a widespread industry purge of alleged corruption inside the industry, but subsequent investigations never came to fruition. Their defenders say Maduro sought to scapegoat them for the industry's steep deterioration, as illustrated by tumbling oil production and the breakdown of nearly all of PdV's refining capacity.

Citgo-6

The imminent trials, albeit lacking in credibility, have sparked speculation that Maduro could release six former Citgo executives who were lured back to Caracas from Houston in late 2017 and subsequently arrested.

Last November, a Venezuelan judge convicted them of corruption. An appeal is pending.

Five of the six convicted executives — known as the Citgo-6 — are naturalized US citizens, including former board members and vice presidents Tomeu Vadell, Gustavo Cardenas, Jorge Toledo, and brothers Jose Luis and Alirio Zambrano. The sixth, former Citgo acting president Jose Pereira, is a permanent US resident.

Vadell's daughter Veronica Vadell Weggemen reiterated her father's innocence and told Argus the family is "hoping for a gesture of good faith."

Last week, the Citgo-6 families participated in a global call with new US secretary of state Tony Blinken on US detainees abroad.

Since early 2019, Citgo has been controlled by Venezuela's US-backed political opposition, effectively severing ties with its parent company in Caracas.


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