The US Treasury Department has tightened its authorizations on the Venezuelan operations of Chevron Corp. and several other oil companies, ordering the firms to “wind down” their work in the country by December 1, 2020.
Oil companies are allowed to make transactions “necessary to the limited maintenance of essential operations” in Venezuela until the December deadline. A prior license issued in January was due to expire last week.
Though the new license, issued by the Treasury’s Office of Foreign Assets Control (OFAC), also applies to four other oil companies, those firms have already significantly scaled back their Venezuelan operations, according to media reports and corporate securities filings.
The Treasury sanctioned Venezuelan state-owned oil company Petroleos de Venezuela, S.A. in January 2019 and has since designated companies, individuals, vessels and others engaging in Venezuelan oil trade. The latest restrictions are as part of the US “maximum pressure” campaign against Nicolas Maduro, who the US has not recognized as the country’s President since early 2019 and recently charged with narco-terrorism, an official told reporters.
Chevron has stayed in Venezuela far longer than its rivals. The company’s assets in Venezuela “are mothballed” by the new restrictions, a US official told Reuters. “We will continue to comply with applicable laws and regulations,” Chevron told Bloomberg.
The new license placed strict limits on authorized conduct, prohibiting the drilling, lifting, processing, purchase, transport or shipping of Venezuelan oil. It also barred involvement in oil infrastructure development or contracting, as well as the provision of insurance coverage or dividend payments. The authorized activity includes transactions necessary to ensure personnel safety, the integrity of Venezuelan assets, participation in shareholder meetings, payments for third-party invoices, as well as local taxes and Venezuelan employee salaries.
Chevron’s joint ventures with PdVSA accounted for 23 per cent of the country’s total output as of late March, according to private estimates cited by Reuters. Even before the new restrictions, Chevron had cancelled service contracts at the two largest joint ventures, attributing the decision to falling crude prices, the Reuters report said.
For more information visit www.treasury.gov