Chevron Readies to Leave Venezuela

Facing the imminent withdrawal from Venezuela of U.S. oil giant Chevron Corp., strongman Nicolás Maduro is rolling out the red carpet to other foreign oil companies, saying that all of them would be welcome to set up shop in the South American country.

But it is an open question whether the socialist leader’s offer will find many takers amid signs that the Trump administration aims to ratchet up its sanctions on Venezuela’s troubled oil industry.

The Trump administration revoked last week the license that allows Chevron to sell Venezuelan oil in the United States, giving the U.S. company until April 3rd to wind down its operations in the South American country. The license, which had been awarded in November 2022 by the Biden administration, allowed the U.S. giant to produce and sell oil out of Venezuela despite the ongoing U.S. sanctions imposed on the socialist regime.

Chevron – whose production in Venezuela averaged about 220,000 barrels per day, amounting to about 24% of the country’s current output of 900,000 barrels per day– had an important part to play in Maduro’s designs to help the country’s ailing industry recover, given the company’s willingness to pick up the production slack of the trouble-ridden, state-run Petroleos de Venezuela and its role as the main gateway to the lucrative oil U.S. market.

After Trump signaled that he aimed to resume the policy of “maximum pressure” against the regime that was in place during his first administration, Maduro officials have attempted to publicly minimize any possible impact it might have on the country’s finances.

Speaking Tuesday on national television, Maduro kept to the same line and said Venezuela will continue producing oil without Chevron, but emphasized that his government was still open to allowing other foreign companies to come in.

“All of the country’s oil fields will continue to produce, grow, and consolidate their output,” Maduro said. “Now, if it’s with our national and international partners, even better.… No one in this world can remove us from the equation of stability and energy security in today’s world.”

Last week Jorge Rodríguez, a key Maduro ally and president of the National Assembly, said Venezuela already had companies expressing interest in investing in the country’s oil industry. “The telephones have not stopped ringing,” he said last Thursday. “We are getting calls from all over the world from buyers and oil traders that are desperate to replace Chevron.”

The statements out of Venezuela come amid news reports in the U.S. claiming that the Trump administration will soon announce that it will be revoking the license used by other oil companies operating in Venezuela.

According to a Bloomberg story last week, administration officials “have told companies including French oil producer Etablissements Maurel & Prom SA and an asphalt company run by Florida oil tycoon Harry Sargeant they’ll have 30 days to end operations in Venezuela once the U.S. revokes their waivers to operate there without running afoul of sanctions”.

Previously, Secretary of State Marco Rubio had signaled that more than one oil license would be suspended. “Today, pursuant to @POTUS directive, I am providing foreign policy guidance to terminate all Biden-era oil and gas licenses that have shamefully bankrolled the illegitimate Maduro regime,” Rubio wrote on his X account.

Other companies that might be affected by the new U.S. policy on Venezuela include Spain’s Repsol, Italy’s Eni and India’s Reliance Industries. The operations of all international companies in Venezuela, including Chevron’s, generate about half of the country’s output.

While Repsol, Reliance and Etablissements Maurel & Prom are not U.S. companies, a decision to continue operating in Venezuela after the eventual removal of their license would put them at risk of being found in violation of U.S. sanctions and of themselves facing punitive actions.

Venezuela’s oil production had plummeted to almost 400,000 barrels per day in 2020, a significant decline from the 3.2 million barrels per day produced before the late President Hugo Chávez’s socialist revolution 25 years before. Chevron and other companies have been instrumental in Venezuela’s endeavors to revitalize its oil production.

The contribution to Maduro’s government coming from all foreign oil companies amounts to about $700 million to $800 million per month, said Antonio De La Cruz, director of the Washington based think-tank Inter American Trends.

“That money is used to finance the corruption that keeps the military happy,” he added. “It is also needed to finance the repression that keeps the population under control, but most valuable of all for Maduro, it is clean money that can be used to launder part of the money coming in from illicit sources.”

The U.S. is offering a $25 million reward for the capture of both Maduro and Interior Minister Diosdado Cabello. Both men face federal charges of leading the drug-trafficking Los Soles cartel.