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Joe Biden administration grants Chevron license to expand oil operations in Venezuela

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The Biden administration on Saturday issued an expanded license to Chevron Corp, allowing it to produce petroleum or petroleum-based products produced by its joint ventures in Venezuela.

Under the deal, Chevron would regain partial control of its operations in the Venezuelan oilfields in which it held stakes through joint ventures with the country’s state-owned oil producer, Petroleos de Venezuela SA. The joint ventures produced about 200,000 barrels per day.

A senior administration official told reporters that the Venezuelan government would not receive any benefits under the deal. Chevron will be barred from any dealings with Iran or Russian-controlled entities in Venezuela.

The authorization comes after the Venezuelan government and its political opposition announced plans on Saturday to implement a $3 billion humanitarian program using funds released by the United States.

Under the deal, the two sides will resume talks next month in Mexico City to work out a framework to usher in political changes, including the possible holding of presidential elections by 2024.

The license would restore Chevron’s operations in Venezuela to levels in effect in 2019 before the Trump administration restricted the oil company’s activities there as part of a sanctions campaign aimed at toppling President Nicolas Maduro. Before the shutdown of U.S. operations, Chevron in Venezuela was producing about 15,000 barrels of crude oil a day.

This is not a permanent license and should be renewed every six months. The United States reserves the right to withdraw or modify the license at any time. Chevron’s existing license was set to expire on December 1.

The senior administration official disputed that the move was aimed at reducing soaring energy costs as the United States heads into winter. Instead, the official said, the United States is easing sanctions because the Venezuelan government is taking “concrete steps that alleviate the suffering of the Venezuelan people and support the restoration of democracy.”

Chevron’s extended license “will have no impact on international oil prices,” the official said. “This is about Venezuela and a policy to support a peaceful and negotiated outcome to a political, humanitarian and economic outcome in Venezuela today.”

Yet the license comes just ahead of new sanctions on Russia that will reduce global oil supply and send prices north. By easing sanctions on Venezuela, the Biden administration appears to be sending a signal to global oil markets that could panic over a possible shortfall.

Venezuela produces around 700,000 barrels of oil a day, up from 525,000 barrels a year ago. But it is well below its target of producing 1 million barrels per day by the end of 2021 and a significant drop from the more than 3 million barrels per day the country was producing in the 1990s.

Yet some Wall Street analysts have predicted that Venezuela could easily produce over a million barrels a day.

But Chevron chief executive Mike Wirth has warned his company will need months, if not years, to refurbish Venezuela’s dilapidated oil fields to resume production.

“It wouldn’t be an instant effect,” he told Bloomberg television of the possibility of resuming oil production in Venezuela.



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