Biden downplays idea of easing Venezuela sanctions

Venezuela would need to do "a lot" for the US to ease sanctions on its crude exports to help replace Russian supply, US president Joe Biden said this week.

The comments come after Venezuela released the last jailed former executives of US refiner Citgo over the weekend, the first material sign of improving relations between the countries in many months. But the US administration has also said progress in talks between Venezuelan president Nicolas Maduro and the US-supported opposition leader toward free and fair elections in Venezuela are key for any discussion of lifting US sanctions.

Venezuela has eagerly offered to add more crude to the global market since the beginning of the year, which may sound welcome to the US as the war in Ukraine lead to a steep rise in prices and the Opec+ group of producers said this week it would cut production targets by 2mn b/d.

But the administration has made it clear no clearing of sanctions is imminent, and Venezuela is only one of "a lot of alternatives" for more crude supply, Biden said.

Despite the signal from Washington, Chevron staff in Venezuela appear to be making specific plans should sanctions loosen, taking advantage of a special license the US issued in May to allow the major to negotiate its future activities in the country. This includes more than doubling output from its heavy crude PetroPiar project to 80,000 b/d and ramping up its mostly stalled PetroBoscan site to 120,000 b/d within a year if allowed, a source with Chevron in Caracas told Argus.

The output would need many months, if not years, to increase given the state of infrastructure in Venezuela, the source said. Increasing production from the extra-heavy PetroPiar project would also require a steady stream of diluent, which of late has been arriving from Iran sporadically, the source said.

The Faja project produced only 29,100 b/d in September, based on an internal PdV report. The ramp-up Chevron is discussing would involve a six-fold increase in 12 months.

PetroBoscan has been offline for about 90 days, and its average production for 2022 was just 16,000 b/d.

Chevron's US headquarters declined to discuss specific plans should sanctions be eased of licenses expanded.

"We continue to conduct our businesses in compliance with the current sanctions framework provided by the US Office of Foreign Assets Control (OFAC) under General License 8," the company said.

By Carlos Camacho and Haik Gugarats