The Trump administration has given Chevron Corp, the last major US oil company still operating in Venezuela, until December 1 to “wind down” its business in the OPEC member-nation.
It will allow Chevron to conduct only severely limited operations there until then.
Seeking to ratchet up pressure on socialist President Nicolas Maduro, the US Treasury Department imposed tight new restrictions on Chevron’s joint ventures with Venezuelan state-run oil company PDVSA, which could pave the way for the California-based company’s departure.
Chevron has had a special US operating licence exempting it from sanctions on Venezuela’s vital oil sector since January, but the latest three-month waiver was due to expire on Wednesday.
The action targets what some Trump administration officials say is a key financial lifeline for Maduro as Washington seeks to stifle trade in Venezuelan crude and remove his grip on power.
Chevron and other US oil companies are being squeezed amid a coronavirus-induced supply glut. The collapse in oil prices has threatened to tilt the once-booming US oil industry into bankruptcy.
Chevron’s shares have fallen sharply over the last two days, after US crude futures on Monday fell into negative territory for the first time in history.
The decision on Chevron was made after a fierce debate in the administration, with some officials arguing the United States needed to keep a corporate beachhead in the crisis-hit country while more hawkish Trump aides said staying in Venezuela was helping Maduro keep his grip on power, according to people familiar with the matter.
Treasury’s announcement appeared to mark a partial compromise by setting a potential end point for Chevron’s operations in Venezuela, where the company has been active for about a century, while giving it more than seven months to bring it to a close.
Treasury said Chevron, under a much more restrictive temporary licence, would be allowed only to conduct transactions with PDVSA “necessary for the limited maintenance of essential operations in Venezuela or the wind down of operations” by the beginning of December.
Chevron would be barred from the drilling, sale or transport of Venezuelan oil, infrastructure work except for safety reasons or any financial transactions with PDVSA. Treasury stopped short of formally ordering Chevron out of Venezuela, but will allow so little activity there that it might be untenable to stay.
The announcement also covered oilfield service firms Baker Hughes Co, Halliburton Co, Schlumberger NV and Weatherford International, which had regularly received US permission to remain in the country. The four services firms, however, have already largely ceased operations in Venezuela.
The Trump administration has waged a “maximum pressure” campaign of sanctions and diplomatic measures in an effort to oust Maduro, whose 2018 re-election was considered a sham by most Western countries.
Venezuela’s oil exports have dropped by one-third since the United States and dozens of other countries recognised opposition leader Juan Guaido as the country’s legitimate interim president in January of last year.
But Maduro remains in power, backed by Venezuela’s military as well as Russia, China and Cuba.