Italian oil company Eni and Repsol could start shipping Venezuelan oil to Europe as soon as next month to offset Russian crude, five people familiar with the matter told Reuters, resuming oil-for-debt swaps that halted two years ago when Washington intensified sanctions on Venezuela.
The volume of oil Eni and Repsol are expected to receive is not large, one of the people said, and any impact on global oil prices will be modest. But the green light from Washington to resume oil flows from Venezuela to Europe could be a symbolic boost for Venezuelan President Nicolás Maduro.
The US State Department gave the two companies the go-ahead to resume shipments via letter, the sources said. The administration of US President Joe Biden hopes that Venezuelan crude can help Europe cut dependence on Russia and redirect some of Venezuela’s cargoes from China. Convincing the Venezuelan opposition is another goal, two sources told Reuters.
The two European energy companies, which have joint ventures with Venezuela’s state oil company PDVSA, may count crude shipments to offset outstanding debts and arrears of dividends, the sources said.
A key condition, one of the people said, is that the oil received “has to go to Europe. It cannot be resold elsewhere.”
Washington believes that PDVSA will not benefit financially from these cashless transactions, unlike Venezuela’s current oil sales to China, that source said. China has not adhered to Western sanctions on Russia and has continued to buy Russian oil and gas, despite calls from the United States.
The authorizations arrived last month, but the details and restrictions of the resale had not been reported until now.
Eni and Repsol did not immediately respond to requests for comment.
excluded
Washington has not made similar authorizations for the US oil company Chevron Corp, India’s Oil and Natural Gas Corp and France’s Maurely Prom, which also pressured the US State Department and the US Treasury Department to obtain oil in exchange for billions. of dollars in debts accumulated by Venezuela.
The five oil companies stopped swapping oil for debt in mid-2020 amid former US President Donald Trump’s “maximum pressure” campaign, which cut Venezuela’s oil exports but failed to topple Maduro.
PDVSA has not scheduled Eni and Repsol to take any shipments this month, according to a June 3 preliminary company plan seen by Reuters.
Venezuelan Vice President Delcy Rodríguez tweeted last month that she hoped the US proposals would “pave the way for the total lifting of illegal sanctions that affect all” of her people.
Approach to Caracas
The Biden administration held top-level talks with Caracas in March, with Venezuela freeing two of at least 10 US citizens jailed in the country, and promising to resume election talks with the opposition. Maduro has not yet agreed on a date to return to the negotiating table.
Republican lawmakers and some of Biden’s Democratic peers oppose any easing of US policy toward Venezuela, which they see as too one-sided.
Washington maintains that further sanctions relief on Venezuela will be conditional on progress toward democratic change with the opposition.
Last month, the Biden administration authorized Chevron, the largest US oil company still operating in Venezuela, to speak with the Maduro government and PDVSA about future operations in Venezuela.
Around that time, the US State Department secretly sent letters to Eni and Repsol saying that Washington “would not object” if they resumed oil-for-debt deals and took the oil to Europe, one of the sources said.
The letters assured them they would not face sanctions for bringing in Venezuelan oil to collect outstanding debt, two sources in Washington said.
Chevron
Chevron’s request to the US Treasury to expand its operations in Venezuela came as the State Department issued letters of no objection to Eni and Repsol. The person familiar with the matter in Washington declined to say whether Chevron’s application was still under review.
The US oil company did receive a six-month continuation of an asset-preserving license and US approval to speak with Venezuelan government officials about future operations.
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