Updates with more details throughout
US president Donald Trump's administration is in talks with Caracas to "indefinitely" take over oil sales by state-owned PdV and will offer partial sanctions relief for Venezuela's oil sector.
The US has already begun marketing Venezuelan crude "in the global marketplace for the benefit of the United States, Venezuela, and our allies", the US Department of Energy (DOE) said. The US will work with leading oil trading companies and major banks to finance those sales, according to a DOE factsheet.
The US will partially lift sanctions on the Venezuelan oil sector but the sales proceeds will be deposited in US-controlled bank accounts, the DOE said.
As a first step, the US will take possession of an estimated 30mn-50mn bl of crude held in floating and onshore storage in Venezuela, US energy secretary Chris Wright said at the Goldman Sachs Energy, CleanTech and Utilities Conference in Miami, Florida, on Wednesday.
Then "indefinitely, going forward, we will sell the production that comes out of Venezuela into the marketplace", Wright said.
The US would supply the diluent required to enable the extraction and transportation of the heavy crude Venezuela produces, Wright said. "As we make progress with the government, we'll enable the importing of parts and equipment and services to kind of prevent the industry from collapsing, stabilize the production, and then as quickly as possible, start to see it growing again."
The US will authorize Venezuela's imports of select oil field equipment, parts and services, the DOE said.
The DOE also committed the US to working with interim Venezuelan authorities to repair Venezuela's dilapidated electricity grid.
Taking these steps will eventually lead to the return of more US companies to Venezuela, Wright said.
The DOE factsheet provides little detail on how the US will transport the initial batch of Venezuelan crude held in storage or on the marketing arrangements. The US in December imported 120,000 b/d of Venezuelan crude, under a sanctions waiver held by Chevron.
The bulk of Venezuelan crude is heading to China, where independent refiners are the only buyers, to the tune of 430,000 b/d in 2025. Cuba imported some volumes as well.
The DOE factsheet does not explicitly state whether the US will prohibit Venezuelan sales to specific destinations.
Venezuela's crude output was 934,000 b/d in November, according to an average of Opec secondary sources including Argus.
"We think short term, you might see [an additional] 250,000 b/d of Venezuelan oil come to the market over the next year," investment bank JP Morgan vice president Stephen Jury said on Wednesday.
What's next?
The plan outlined by Wright is the result of rapid improvisation of Trump's objectives in Venezuela following the 3 January US special forces operation that captured the country's president, Nicolas Maduro, and transported him to the US on drug trafficking charges. The Trump administration said it is working with interim president Delcy Rodriguez to accomplish its goals.
Rodriguez has combined publicly defiant rhetoric with actions that aim to implement Washington's demands, with which PdV and its main foreign partner Chevron are now racing to comply.
PdV said on Wednesday it is "negotiating with the US to sell volumes of oil" on "strictly commercial" terms, without specifying the amount. The sale will be carried out "under a framework similar to the one with international companies such as Chevron", PdV said.
Chevron already holds a company-specific waiver from the US Treasury Department's sanctions enforcement arm, the US Office of Foreign Assets Control (Ofac). That waiver restricts Chevron to importing Venezuelan crude only into the US, among other conditions.
The potential buyers of Venezuelan crude will have to apply for waivers as well, unless Ofac grants a general exemption.
Treasury did not immediately comment on plans to provide sanctions relief for Venezuela's oil industry.
PdV is not in a position to quickly deliver any volumes beyond those in floating storage because of long-term operational issues and recent major equipment outages. Uncertainty after the recent seizure of Maduro has led some PdV workers to avoid reporting for work.
"PdV is working at minimal capacity", a PdV source told Argus. "Operational areas [E&P and upgrading] are half working. Storage is full."
Three out of four major upgrading units needed to make Venezuela's extra-heavy crude oil more easily transportable are still down after unexplained explosions and fires in recent weeks, following the US build-up of military forces near Venezuela, the source said.
Wright is scheduled to meet with US oil executives on the sidelines of the Goldman conference to discuss details of the US involvement in Venezuela's oil sector.
Trump in turn will discuss Venezuela with US oil executives at the White House on 9 January.
