US extends Chevron waiver for Venezuela: Update

Adds comments from Chevron

The US government today renewed Venezuela sanctions waivers allowing Chevron and four oil services companies to maintain a minimal presence in that country, signaling no changes in the broader policy toward Caracas.

The waivers allowed Chevron and services companies Schlumberger, Halliburton, Baker Hughes and Weatherford to continue operating in Venezuela after former president Donald Trump's administration imposed oil sanctions on the Opec country in January 2019. The terms of the US companies' continued presence were tightened last year, preventing Chevron from drilling, lifting, purchasing or processing Venezuelan-origin crude or oil products. The current waiver, valid through 1 December, maintains the same terms.

Chevron said it "will continue to comply with applicable laws and regulations in relation to the activities that it is authorized to undertake in Venezuela."

State-owned PdV is the majority shareholder in Chevron's oil assets, of which only PetroPiar and PetroBoscan in western Venezuela were active when the US company was forced to halt activities last year. Chevron has 30pc of PetroPiar and 39pc of PetroBoscan. The company also has 34pc of the PetroIndependencia joint venture in the oil belt, and 25pc of PetroIndependiente in the west. And on the maritime border with Trinidad and Tobago, Chevron has 60pc of the Loran natural gas field.

"We remain committed to the safety and well-being of our employees and their families, the integrity of our joint venture assets, and the company's social and humanitarian programs during these challenging times," Chevron said. "Chevron is a constructive presence in the country, supporting social investment and humanitarian programs that provide needed services for the communities where we work, including nutrition and health. In the last 10 years, we have dedicated more than $100mn dollars toward diverse social initiatives."

President Joe Biden's administration has indicated it has no immediate plans to ease sanctions against Venezuela's oil sector or change its policy of forcing the country's president, Nicolas Maduro, to agree to a new election. US sanctions have been unsuccessful in achieving that outcome — a reality current US officials acknowledge — but Biden's administration is still reviewing possible tweaks to its Venezuela policy, and the issue is not a foreign policy priority for the White House.

The Citgo docket

The Biden administration will have another chance to address its Venezuela policy next month, as it reviews whether to extend a prohibition on a potential takeover of US refiner Citgo by holders of PdV's bond.

The holders of a defaulted PdV 2020 bond backed by shares in Citgo have been unable to press for a takeover after the US Treasury Department's sanctions enforcement arm, the Office of Foreign Assets Control (OFAC), began issuing general licenses in 2019 that prohibit that outcome.

Aside from the PdV 2020 bondholders, other creditors of PdV and the Venezuelan government have asked US courts to satisfy their claims by putting Citgo on the block. A process to establish the sale of shares of Citgo is underway in US District Court for the District of Delaware. "While the court may soon be required to resolve additional issues regarding the OFAC regulations, the court need not do so at this time in order to finalize the special master's appointment," judge Leonard Stark wrote in an opinion last week, referencing the appointment of a representative overseeing the sale.

The court battles for Citgo highlight political and legal challenges that originated with an unprecedented US policy decision to discontinue its recognition of Maduro's government and awarding that recognition to Venezuelan opposition leader Juan Guaido.

Citgo, as a result, is still nominally controlled by an ad hoc board that reports to Guaido, even though PdV remains under the control of Maduro's government. Citgo operates a 770,000 b/d refining system in the US Gulf coast and midcontinent.

By Haik Gugarats