By Marianna Parraga and Daphne Psaledakis
HOUSTON/WASHINGTON (Reuters) – The United States is preparing to prioritize issuing limited licenses to operate in Venezuela to companies with existing oil production and assets over those seeking to enter the OPEC-sanctioned country for the first time, they said. two people close to the discussions.
The move appears designed to encourage companies that have projects frozen due to US sanctions, such as Italy’s Eni and Spain’s Repsol, to expand operations, recover outstanding debts and add oil to global markets.
However, it will avoid licensing companies without prior investments in the country, limiting the revenue Venezuela could obtain from its oil industry.
Some companies with long-standing energy projects in Venezuela, including U.S.-based Chevron and France’s Maurel & Prom, have permits to expand oil and gas production in the OPEC member country. Trinidad and Tobago and Shell also received a US license last year to develop a gas field with Venezuela.
Other companies, such as India’s Reliance Industries and clients of state-owned company PDVSA, with no assets in the country, hope to obtain US approvals.
The U.S. Treasury Department said last month it would offer some individual authorizations to companies to operate in the South American country, after failing to renew a broad license that eased restrictions on oil and gas trade. The resumption of sanctions came after the US decided that Venezuela had not fully fulfilled its promises to guarantee a competitive presidential election.
A Treasury spokesperson said the department would not comment on specific licenses because its evaluation process and criteria are not public.
Treasury “generally depends on the foreign policy guidance of the U.S. Department of State and takes into account the national security interests of the United States,” the spokesperson said. The State Department declined to comment.
PDVSA did not immediately comment.
OPTIMISM DISAPPEARS
Venezuelan Oil Minister Pedro Tellechea said the proposed US authorizations would allow many foreign companies to expand joint ventures with PDVSA, while new partners could start new projects in search of capital.
But the limited U.S. exemptions under consideration will reduce the opportunity for Caracas to utilize PDVSA partners to expand the country’s crude oil production in the near term. Venezuela’s oil exports rose to around 900,000 barrels per day in March, before the US decided not to renew the license linked to the elections.
Venezuela’s Vice President Delcy Rodriguez on Tuesday criticized the impact of US sanctions over the past five years, which she said have cut billions of dollars from Venezuela’s GDP.
“It is an international embarrassment that in the 21st century… the objective is to subjugate countries through the mechanism of economic sanctions,” she said during a conference in Caracas.
President Nicolás Maduro could push for specific U.S. licenses for the oil and gas industries if he believes they are essential to attracting new investment or expanding businesses that provide cash, one of the people familiar with the matter said.
The guidelines being prepared by Washington will mainly seek to help foreign companies recover outstanding debts and dividends in Venezuela, which in the last five years has affected many North American, European and Asian companies.
The proposal appears to exclude companies without prior investment in Venezuela that have signed agreements with PDVSA to form new joint ventures, according to the people.
At the end of last year, PDVSA prepared a list of 17 potential joint ventures to be formed or expanded. The list included newcomers and long-time investors such as Repsol and Chevron.
Some North American and European companies obtained exemptions from the Venezuela sanctions regime through so-called “letters of comfort” issued by the State Department or specific licenses.
(Reporting by Marianna Parraga in Houston and Daphne Psaledakis in Washington, additional reporting by Matt Spetalnick; Editing by Marguerita Choy)
