Nick Wadhams and Fabiola Zerpa, Bloomberg News

WASHINGTON/CARACAS
EnergiesNet.com 03 31 2022

The Biden administration is debating whether to ease some sanctions on Venezuela to let Chevron Corp. speak directly with President Nicolas Maduro’s government, as the U.S. looks for ways to jump-start stalled talks with the political opposition, people familiar with the matter said. 

Lifting a ban on communication with senior members of the Maduro regime would allow Chevron to prepare for a day when punishing sanctions on Venezuela’s oil industry are lifted — something the U.S. insists isn’t currently under consideration. It would also allow Chevron to negotiate more control over its joint ventures with state-run oil company PDVSA, according to the people.

The people, who asked not to be identified discussing private deliberations, emphasized that any move permitting direct contact would likely come only in exchange for progress in political talks between Maduro’s government and the country’s opposition. Those negotiations have been stalled since September, when Maduro stopped participating.

They said the idea of allowing the contacts is being floated as part of President Joe Biden’s push to come up with fresh ideas for reviving the talks and pulling Venezuela out of Russia’s orbit. The window for those talks to go forward could narrow if Republicans gain control of Congress this fall and press ahead with legislation to ban crude imports from Venezuela.

Mexican Envoy Visits Caracas as U.S. Weighs Sanctions Relief 

With PDVSA’s leadership beholden to Maduro and his most senior aides, one person familiar with the matter said Chevron wants direct contact with Vice President Delcy Rodriguez, under sanctions since 2018, and Oil Minister Tareck El Aissami, who was sanctioned in 2017. Chevron’s presence in Venezuela dates back to the 1920s and the company currently works on four joint venture operations with state-run PDVSA.

Progress in political talks could also lead to measures allowing Chevron and other holders of defaulted Venezuelan debt to be paid, something that’s currently blocked by U.S. sanctions imposed over Maduro’s refusal to hold free and fair elections.

Chevron spokesman Ray Fohr said the San Ramon, California-based company doesn’t comment “on rumors or speculation.”

“We continue to conduct our business in compliance with the current sanctions framework provided by the U.S. Office of Foreign Assets Control,” Fohr said. “We are a constructive presence in Venezuela, where we have investments and a large workforce who are dependent on our presence.”

Officials at the State Department didn’t immediately respond to a request for comment. 

Although even a modest easing of penalties on Venezuela could serve a number of purposes for the U.S., it would come with big political risks for Biden. His administration is wary of making any moves given the political firestorm that erupted in February over reports that it was preparing to ease sanctions on Venezuela’s oil sector as part of a strategy to stabilize markets following Russia’s invasion of Ukraine.

Those accusations exploded after the administration disclosed that a team of administration officials led by National Security Council Senior Director Juan Gonzalez and U.S. Ambassador to Venezuela James Story — normally based in Bogota — had traveled to Caracas. 

The envoys were seeking the release of several Americans held in Venezuelan prisons and to inject new momentum into the talks between the government and the opposition, according to the people.

Yet the narrative that emerged was that the administration was actually looking to ease sanctions so it could ease gasoline prices in the U.S. amid a surge in inflation ahead of the November midterm elections. Lawmakers in the U.S. Congress from both parties quickly assailed the assumed reason for the trip to Caracas, including Senator Bob Menendez, the New Jersey Democrat who chairs the Foreign Relations Committee. 

White House Pushback

All along, U.S. officials argued the narrative was wrong and said the administration — which continues to recognize opposition leader Juan Guaido as Venezuela’s interim president — was nowhere near ready to ease sanctions without substantial progress in political negotiations. And they said that the diplomatic trip had been planned well before Russia’s Ukraine invasion.

“There was poor coordination — or no coordination,” Scott Modell, managing director of Rapidan Energy Group, a Washington-based consultant, said of the administration’s handling of Venezuela. “It’s a slow-moving policy process after being dead for the last year or so, but I still hear a lot of pessimism about any big moves.”

In the end, two American detainees held in Venezuela were freed, although several others remain. They include three former U.S. service members and a group of executives known as the “Citgo 6.” 

Several people familiar with the matter said U.S. discussions had largely ground to a halt after the controversy over the potential easing of energy sanctions erupted. 

But Chevron and other oil companies have been lobbying for months for the U.S. to loosen its restrictions.

Two people familiar with the matter said Chevron has approached congressional offices with the idea of an “oil-for-food” program, whereby Venezuela would pay for humanitarian goods with oil — an idea that the administration is open to considering. Still, officials are wary given that such programs — notably in Iraq in the 1990s — were riddled by corruption.

The U.S. will review the sanctions “if and only if the Venezuelan parties made meaningful progress in the Venezuelan-led negotiations in Mexico toward achieving fulfilling those aspirations of the Venezuelan people for a true, for a genuine democracy,” State Department spokesman Ned Price said March 11.

Putin Allies

The issue of Chevron’s partnership with PDVSA and its future in Venezuela has also gained urgency given that Republicans could gain control of Congress after the November elections. Already, a handful of Republican lawmakers have introduced legislation in the House and Senate that would ban all imports of Venezuelan crude.

“Under no circumstance should we be funneling money into the hands of dictators and narco-terrorists, who are also allies of Vladimir Putin,” Florida Senator Marco Rubio said of the Russian president this month in a statement announcing his legislation, which would also ban crude imports from Iran.

Although the bills have little chance of becoming law this year, it foreshadows how a Republican-led Congress could try to limit the administration’s moves to make a deal with Maduro after the midterm elections.

bloomberg.com 03 30 2022