By Timothy Gardner
WASHINGTON (Reuters) – The Trump administration said on Friday it has renewed Chevron Corp’s <CVX.N> licence to drill for oil and gas in Venezuela despite sanctions, signalling it sees value in having the U.S. oil producer operate in a country on the verge of economic and political collapse.
The Treasury Department said it renewed the licence for three months for Chevron, the last U.S. oil company operating in Venezuela, a member of the OPEC producer group. The licence runs through Oct. 25, 2019.
“Our operations in Venezuela continue in compliance with all applicable laws and regulations,” Chevron spokesman Ray Fohr said in a release.
The United States imposed heavy sanctions on Venezuela early this year in an effort to force out socialist President Nicolas Maduro. Washington supports opposition leader Juan Guaido, the head of the National Assembly.
In January the administration imposed sanctions on Venezuela’s state-run oil company PDVSA that have cost Maduro’s government billions of dollars in oil assets, but issued Chevron a six-month licence to keep its operations going.
Chevron has four joint ventures with PDVSA that produce the equivalent of about 200,000 barrels per day of oil, and its stake in the ventures recently produced about 40,000 bpd. The company, which has been in Venezuela for nearly 100 years, says there are about 8,000 employees, contractors and direct suppliers involved in the ventures.
The renewal of the licence was a win for Secretary of State Mike Pompeo and others in the administration who believe that having a U.S. company in Venezuela would be an asset after any ouster of Maduro and would serve as a beachhead to help the country’s oil dependent economy recover more quickly.
The president’s national security adviser John Bolton, who has pushed for maximum pressure on Venezuela, had favoured letting Chevron’s licence expire in hopes it would tighten the noose on Maduro’s leadership by leading to another dip in the country’s energy production.
The Treasury Department also renewed licenses for three months for oil field service companies Halliburton Co <HAL.N>, Schlumberger <SLB.N>, GE’s Baker Hughes <BHGE.N> and Weatherford International. <WEATH.UL> All have largely halted operations in Venezuela because of the instability.
A U.S. State Department spokesperson said the licence had been extended for the five companies, adding that “the limited scope of the licence is intended to facilitate U.S. oil companies in abiding by their contractual obligations, maintaining their operations assuming they choose to do so, and avoiding economic harm to the United States.”
The spokesperson added that Washington “will continue to take appropriate action against Maduro and those aligned with him.”
As of July, Venezuela’s output was just 734,000 bpd, about half of what it averaged in 2018, prior to U.S. sanctions, when production was 1.4 million bpd, according to OPEC figures.
(Reporting by Timothy Gardner; additional reporting by Luc Cohen in Caracas and Susan Heavey and Lesley Wroughton in Washington; Editing by David Gregorio)