The Trump administration’s decision to revoke the licenses allowing Chevron and other international companies to produce oil in Venezuela is likely to have a debilitating impact on the Caracas regime’s finances and limit the ability of strongman Nicolás Maduro to keep his ruling coalition together.
But don’t expect to see regime change anytime soon. Maduro and his inner circle have already survived the round of sanctions that came with the policy of “maximum pressure” adopted during the first Trump administration, and are well versed in the practice of smuggling oil, illicit gold and cocaine to compensate for the shortfall in traditional oil sales, analysts say.
Accusing Maduro of not picking up taking deported Venezuelan migrants from the U.S. with the speed he had pledged, Trump announced through his Truth Social account on Wednesday that the United States will revoke, as of March 1, the license granted to Chevron by former President Joe Biden.
Chevron’s production out of the South American country currently averages about 220,000 barrels per day, amounting to about a quarter of the country’s current output of 900,000 barrels per day.
But Secretary of State Marco Rubio on Wednesday night signaled that more than one oil license will 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 late on Wednesday on his X account.
If the measure to be announced in the next few days also includes the licenses granted to Spain’s Repsol, Italy’s Eni, France’s Maurel & Prom and India’s Reliance Industries, the overall impact to the Venezuelan output could surpass 450,000 barrels per day.
Just as is the case with Chevron, these foreign companies have received licenses from the U.S. Treasury Department that allows them to operate in Venezuela without the risk of being found in violation of the sanctions imposed on the Maduro regime and running the risk of being sanctioned themselves.
Chevron and the other companies have played a key role in Venezuela’s efforts to boost its oil production, which had fallen to levels nearing 400,000 barrels per day in 2020, from the 3.2 million barrels per day it managed to produce before late president Hugo Chávez launched his socialist revolution 25 years ago.
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.”
Maduro and the number-two man in the regime, Interior Minister Diosdado Cabello, each have a $25 million reward offered by the United States for their capture. They both face federal charges in the U.S. of being the heads of the drug-trafficking Soles cartel.
The role of drug-trafficking money in the regime’s finances has grown substantially in the past few years and helped the regime survive the impact of the sanctions imposed by Trump on the Venezuelan oil industry in January 2019. U.S. law enforcement officials believe that the Venezuelan cartel exports somewhere between 250 and 350 tons of cocaine per year with a street value of between $6.25 billion and $8.75 billion, much of it bound for the United States.
While suspending the licenses will in essence shut down the access of Venezuelan oil to the international markets, and in particular to the refineries serviced by Chevron in the United States, this does not mean the flow of crude from the South American country will stop altogether.
In an attempt to evade the sanctions imposed on state-run Petróleos de Venezuela, the regime began to use small intermediaries to send the country’s shipments to China via Indonesia and other countries.
These smaller companies would buy Venezuelan crude at a huge discount to cover the inherent risks of the operations, thus significantly reducing the oil revenues available to the regime, but still providing a considerable amount of cash.
Analysts told the Herald that one of the main developments to watch is the speed in which the suspensions of the licenses are implemented.
Given that the Chevron license was automatically renewed for a six-month period, the U.S. company would in theory have five more months to wind down its operations in Venezuela due to the fact that it was most recently renewed on Feb. 1.
Yet world oil markets were abuzz with speculation Thursday morning that the administration could actually decide to give Chevron a much shorter wind-down period in light of Trump’s comments that Maduro’s commitments and the objectives surrounding the license have not been met.
Analysts also believe that a prolonged winding-down period for Chevron would give the Trump administration and the Maduro regime sufficient time to try to negotiate some sort of arrangement to overcome the current impasse.
But Maduro’s long history of not keeping his word makes it very unlikely that any accord reached could have a lasting effect. In a deal reached with the Biden administration in 2023, the Venezuelan strongman committed to holding free and fair elections and stepping down if he lost.
The election was held in July of last year and the United States and a large number of other countries concluded that Maduro lost by a margin of 2-1 to opposition candidate Edmundo González. Yet the regime declared that Maduro had won reelection to a third presidential term.
Reacting Wednesday night to Trump’s announcement, a defiant Maduro claimed that no “threat” will be able to break “the will of the people of Venezuela to advance towards their independence, towards their freedom and towards their maximum happiness.”
“Make no mistake... Venezuela will not be attacked, Venezuela is not touched,” he said. “Venezuela is respected.”
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