Venezuela Replaces U.S. Oil Giants with Chinese and Argentine Firms
- After U.S. sanctions forced out Western oil companies in May, Venezuela signed at least nine deals with foreign firms, including major Chinese and Argentine companies.
- PDVSA’s new partners include Anhui Guangda, China Concord Resources, and Aldyl Argentina SA, aiming to sustain production and crude exports despite the sanctions.
- Crude exports in May remained stable as increased shipments to China offset the drop in U.S.-licensed oil trade.
Venezuela hasn’t waited long to replace Western service providers in its oil industry after the U.S. sanctions, and has signed at least nine agreements with foreign firms, including from China, sources with knowledge of the deals told Bloomberg.
Under the U.S. sanctions, Western oil producers were given time until May to wrap up their operations in Venezuela, home to the world’s biggest crude oil reserves.
U.S. licenses for the biggest oilfield service providers – Schlumberger, Halliburton, Baker Hughes, and Weatherford International – expired in early May. Supermajor Chevron was given until May 27 to wind down operations in Venezuela, and the U.S. isn’t extending any waivers anymore.
But Venezuela needs oil revenues and oil flowing to international buyers. So it is turning to companies from China and other countries.
The firms include Aldyl Argentina SA and China’s Anhui Guangda Mining Investing and China Concord Resources, per an internal document of PDVSA seen by Bloomberg.
“PDVSA has a plan to keep producing oil despite the US’s unilateral coercive measures,” Venezuela’s Vice President and Oil Minister Delcy Rodriguez said at the end of May.
During that time, Nicolas Maduro solidified his power over Venezuela following regional and parliamentary elections, which his ruling party said it won in a landslide, while the opposition called for a boycott of the vote and claimed turnout was below 15%.
Earlier this year, the Trump Administration revoked Chevron’s license to operate in Venezuela and export oil from its oilfields, setting May 27 as the deadline for Chevron to wind down its operations in the South American country.
The U.S. Treasury has also revoked a license for French oil firm Maurel & Prom to operate in Venezuela and is no longer allowing firms, including Eni and Repsol, to receive oil from PDVSA in lieu of payments.
Despite the U.S. sanctions, Venezuela’s crude oil exports remained unchanged in May compared to April, as increased shipments to China helped offset a sharp drop in U.S.-authorized sales.
By Charles Kennedy for Oilprice.com
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