The US administration on Wednesday further eased restrictions on oil and gas investment in Venezuela, casting the move as relief from the disruption of Mideast Gulf oil and LNG supply.
Until Wednesday, only six companies — Chevron, BP, Shell, Italy's Eni, Spain's Repsol and France's Maurel & Prom — were allowed to freely operate in Venezuela. The US Treasury Department's Office of Foreign Assets Control (OFAC) on Wednesday issued a license lifting all restrictions on Venezuela oil and gas operations and allowing future upstream investment for all "established US entities", defined as companies that operated in the US as of 29 January 2025.
The US companies will have to pay Venezuelan oil and gas taxes and royalties into a US-controlled bank account, currently in Qatar. Any contracts between those companies and PdV and the Venezuelan government would have to specify the primacy of US laws for dispute resolution.
"This license will benefit both the US and Venezuela, while supporting the global energy market by increasing the supply of available oil," Treasury said. "It will also help incentivize new investment in Venezuela's energy sector."
Venezuela's potential future production cannot resolve the immediate disruption of the Mideast Gulf supply. Tehran has enforced a near halt on commercial shipping through the strait of Hormuz, through which about 25pc of globally traded crude volumes and 20pc of LNG supply were flowing before the US-Israel war against Iran began.
But Venezuela suddenly appears more investment-worthy after prolonged US attacks on Iran have roiled crude markets.
Ring-fencing Citgo from takeover
OFAC clarified on Wednesday that it will continue to block attempts by creditors of Caracas and PdV to enforce their claims. The court-ordered sale of PdV-owned US refiner Citgo still will require explicit authorization from the US authorities, OFAC said.
The US administration has yet to clarify its position on Citgo's governance structure. Citgo since 2019 has operated under a board appointed by the Venezuelan opposition and cleared by the White House. The US enforced this arrangement after withdrawing official recognition from the government of Venezuela under former president Nicolas Maduro.
The Citgo board, comprised of Venezuelan expatriates who previously worked in PdV, has improved the company's financial health but has ultimately proved unsuccessful in staving off legal challenges by Venezuelan creditors to sell Citgo to satisfy debts accrued by Caracas.
The US earlier this month restored formal relations with Venezuela's interim president Delcy Rodriguez's government. But Washington has yet to allow the Caracas-based PdV to reassert control over Citgo.
The Rodriguez government appears to be preparing to do just that. PdV has tapped Asdrubal Chavez as the president of Citgo, according to a company document seen by Argus. Asdrubal Chavez, a cousin of former president Hugo Chavez, served as Citgo president in 2016-18 but had his US visa revoked and was evicted from the US in 2018.
If confirmed, Asdrubal Chavez would be replacing Citgo president Carlos Jorda. PdV has also picked replacements for other Citgo board members. The US State Department did not immediately comment on whether the US would accept PdV appointments for Citgo's board.
