President Nicolás Maduro of Venezuela bets against the full return of US sanctions, despite not keeping election promises.
This stance worries Venezuela’s oil industry. Sector insiders fear the collapse of budding deals if the US ends a sanctions pause in April.
This concern stems from Maduro banning opposition election candidates.
“Small firms face big risks,” says Rubén Pérez, an energy consultant. “Larger companies might cope better, but uncertainty prevails.”
Reinstating sanctions could cut Venezuela’s oil output by 30% to 600,000 barrels daily, Fernando Ferreira of Rapidan Energy Group notes.
After the US eased sanctions in October, allowing dealings with PDVSA, production rose 22%.
Venezuela’s court disqualified opposition candidate María Corina Machado, ignoring US calls for fair elections.
The US hinted at not extending oil sanctions relief beyond April without changes from Venezuela.
Oil Minister Pedro Tellechea claims Venezuela is ready for any outcome and seeks dialogue.
However, President Joe Biden has reasons to continue sanctions. Stable Venezuelan oil could lower global and US fuel prices.
Biden, facing re-election challenges, aims to curb migration by improving Venezuela’s economy.
Oil executives, preferring anonymity, worry about losing their investments amid rising tensions.
Some had been renewing US ties, eyeing equipment imports and financial relationships.
Despite this, PDVSA’s indirect purchases and the future of US sanction relief, License 44, remain uncertain.
Effects of Sanction Relaxation on Oil Companies
Since sanction relaxation, companies like National Gas Co. and Shell have gotten export licenses.
Repsol and Maurel & Prom struck deals to boost production. Yet, no major agreements have been confirmed.
In addition, the continuation of these deals under renewed sanctions is unclear. The US reassured Trinidad that a gas project license involving Venezuela would persist.
Trinidad’s Prime Minister Keith Rowley stated they remain unaffected, showcasing the complex web of interests around Venezuela’s oil industry amidst geopolitical tensions.