U.S. Extends License For Transactions With Venezuela's PDVSA

By Julianne Geiger - May 10, 2024, 

The United States has extended a general license through November 15, allowing certain transactions with Venezuelan state oil company PDVSA that are necessary for wind-down operations, according to a notice from the U.S. Treasury Department. The extension covers key players in the industry, including Halliburton, Schlumberger, Baker Hughes Holdings, and Weatherford International PLC.

This extension comes amid ongoing political tensions and economic challenges in Venezuela. Recent contract cancellations by entities like Polish refiner Orlen underscore the impact of geopolitical uncertainty on global energy markets, highlighting the complexities faced by industry stakeholders.

Despite the sanctions, Venezuela remains open to dialogue with key global players, particularly China, its largest creditor, and the United States. Venezuela's Nicolas Maduro expressed earlier this week the country's commitment to repay its debt to China.

The Biden Administration's decision to extend the general license reflects the nuanced approach of the U.S. in managing its relationship with Venezuela's oil sector, seeking balance between diplomatic considerations and commercial interests by providing temporary relief for companies engaged in wind-down operations.

Last month, crude oil prices were pressured by news that the U.S. would reimpose oil sanctions on Venezuela after a six-month pause, beginning on May 31. The upward pressure on oil prices, however, was tempered by a build in U.S. crude oil inventories. That license allowing wind-down transactions is now being extended until November.

Last November, Venezuelan Oil Ministry officials said that its crude oil production had reached 850,000 bpd and was on its way to recovering market share. While the figure was an improvement from the 786,000 bpd in October, and despite oil ministry officials' claim that recovery in its troubled crude oil industry was ongoing, the six-month pause in sanctions left but a temporary window open for traders to rush into Venezuelan crude that will soon close.

By Julianne Geiger for Oilprice.com