By Daphne Psaledakis, Marianna Parraga and Matt Spetalnick
WASHINGTON/HOUSTON (Reuters) -The U.S. will not renew a temporary license that widely eased sanctions on Venezuela's oil and gas sector unless progress is made by President Nicolas Maduro on commitments for free and fair elections this year, a State Department spokesperson said on Monday, three days before the license is to expire.
The U.S. has been concerned about Venezuela's electoral process and what it sees as Maduro's failure to meet his main promises for the July 28 presidential elections.
"Absent progress by Maduro and his representatives in terms of implementing the road map’s provisions, the United States will not renew the license when it expires on April 18, 2024," the spokesperson said.
The Biden administration holds out little hope that Maduro will make enough concessions before Thursday's deadline to satisfy U.S. demands. U.S. and Venezuelan officials met secretly in Mexico last Tuesday, but a source familiar with the talks said they made little or no progress on narrowing their differences.
The U.S. provided the partial sanctions relief in October in response to an election deal reached in Barbados between Maduro's government and the opposition. The agreement included the right of the opposition to choose its own presidential candidate.
Failure to renew the current license would not rule out the possibility that the U.S. could issue a new, more restrictive license to replace it.
Venezuela's oil exports in March rose to their highest level since early 2020 as customers rushed to complete purchases ahead of the predicted expiration of the U.S. license, Reuters reported this month.
Venezuela's state-run oil firm, PDVSA, has said it is prepared for any scenario, including the return of full oil sanctions.
President Joe Biden's aides are still discussing a range of options ahead of the expiration on Thursday of the U.S. license that has allowed Venezuela to freely sell its crude, according to people familiar with the matter.
The Biden administration is determined to punish Maduro’s government in some way and is deliberating on how far to go in withdrawing sanctions relief, though it is expected to stop short of a full return to the Trump-era "maximum pressure" policy.
Possible steps under serious consideration would be to allow Venezuela to continue selling its crude on world markets but to reimpose a ban on use of U.S. dollars in such transactions, requiring Venezuela to switch to other currencies and expand barter arrangements and swaps, according to people briefed on the discussions.
That option could expand the Venezuelan banking sector's role in oil sales if transactions in domestic currency are the only ones authorized.
"We are going ahead with a license or without a license, we aren't a gringo colony," Maduro said on his weekly television program on Monday evening, adding that lawmaker and government negotiator Jorge Rodriguez had attended a video call about the decision.
A bipartisan group of U.S. senators urged Biden last week to consider individual sanctions for those directly responsible for "repressive actions." Successive U.S. administrations have already sanctioned scores of Venezuelan officials.
U.S. officials are not planning to roll back the authorization given to Chevron (NYSE:CVX) in 2022 to sell oil in the U.S. from its Venezuela joint ventures, which renews automatically each month. Authorizations to European oil companies to take Venezuelan oil also are expected to remain, the sources said.
Chevron did not immediately reply to a request for comment.
Weighing on current U.S. deliberations are concerns about whether reimposing sanctions on Venezuela's energy sector could spur higher global oil prices and increase the number of Venezuelan migrants heading for the U.S.-Mexico border as Biden campaigns for reelection in November.
The U.S. Treasury Department separately on Monday extended through Aug. 13 a license that protects Venezuela-owned refiner Citgo Petroleum from creditors.
Venezuela's opposition is conducting internal negotiations about how to run a candidate in the July 28 election and who that candidate could be.
Maria Corina Machado, who resoundingly won the opposition primaries last October, cannot run because she is barred from holding public office, a decision she says is unfair. Machado named Corina Yoris as her successor, but the 80-year-old academic was also unable to register her candidacy.
Two opposition candidates were able to register, and possible substitutes can be named until April 20.