By Timothy Gardner and Marianna Parraga
WASHINGTON/HOUSTON (Reuters) -The Trump administration said on Tuesday it was ending a license that the U.S. had granted to oil producer Chevron (NYSE:CVX) since 2022 to operate in Venezuela and export its oil, after Washington accused President Nicolas Maduro of not making progress on electoral reforms and migrant returns.
Washington has in recent years authorized some companies to maintain operations in Venezuela and export oil to certain markets, including the U.S., Europe and India, as exceptions to its sanction regime on the South American country’s energy sector, first imposed in 2019.
Since he took office in January, U.S. President Donald Trump has said the United States does not need Venezuela’s oil, which last year represented about 3.5% of all U.S. crude imports or some 220,000 barrels per day (bpd). However, that flow has been a key means for Chevron to recover billions of dollars in pending debt in Venezuela.
Chevron will have through April 3 to wind down exports and other operations in Venezuela, according to an update of the license published by the U.S. Treasury Department. The update supersedes the previous license granted to Chevron in November 2022, which allowed its operations to expand and Venezuelan exports to the U.S. to resume.
The magnitude of the scale down was not immediately clear. A Chevron spokesperson said the company was aware of Trump’s directive and would abide by any direction given by Treasury to implement it.
A similar wind down order by Trump’s previous administration in 2020 allowed Chevron to produce crude in Venezuela and remain as a partner in joint ventures with state firm PDVSA, but banned any exports or imports by the company in the country. That, over time, led to a severe output reduction and the accumulation of billions of dollars in unpaid revenue.
In February, Chevron’s exports of Venezuelan oil fell to 252,000 bpd from 294,000 bpd in January, vessel monitoring data showed.
Venezuela said in a release posted by Vice President Delcy Rodriguez that the license termination would hit the U.S. the most by putting pressure on U.S. gasoline prices and increasing the risks for U.S. companies to invest overseas.
Maduro’s 2024 reelection was backed by Venezuela’s electoral authority and top court, but vehemently contested by the opposition, the U.S. and others.
His government has always rejected sanctions, saying they are illegitimate measures that amount to an "economic war."
MORE TO COME
U.S. Secretary of State Marco Rubio said last month that a new policy would be issued on other foreign oil companies’ presence and operations in Venezuela. Those details have not been released.
Chevron’s joint ventures with PDVSA represent about a quarter of the country’s entire oil output and provide a much-needed source of heavy crude to its own refineries and others operated by firms including Valero Energy (NYSE:VLO), PBF Energy (NYSE:PBF), Phillips 66 (NYSE:PSX) and Exxon Mobil (NYSE:XOM).
Chevron’s license, which is backed by a broad agreement with PDVSA including the operation of joint oilfields and trading, has provided a steady source of revenue to Maduro’s administration since early 2023 through royalties and tax payments. The money has lifted Venezuela’s battered economy, especially its oil and banking sectors, which expanded last year.
The license cancellation is expected to reduce the dollars on offer in Venezuela’s exchange market, stoking depreciation, analysts have said.
It represents the latest economic challenge for Maduro, whose government for years has applied orthodox measures to tamp down formerly sky-high inflation, restricting credit, curbing public spending and until recently, holding the exchange rate steady.