An agreement for the United States to lift the embargo on Venezuelan oil that has been in place since 2019 would benefit the government of Nicolás Maduro in the face of the risk that sanctions on Russia for the invasion of Ukraine pose to Caracas, estimated expert Francisco Monaldi.
Monaldi, director of the Energy Program for Latin America at the Baker Institute for Public Policy at Rice University in Texas, responded to AFP questions following the release of a US delegation’s visit to Caracas over the weekend to speak with the Maduro government, with oil as one of the central themes of the meeting.
Q: What is needed for the US to buy Venezuelan oil again?
A: There has to be a change in existing sanctions. Something limited could be done, like giving Chevron or some Western companies a license to export some shipments to the United States. They could authorize payments to be made specifically to (Venezuelan state oil company) PDVSA for these shipments in order for the Venezuelan government to authorize the measure.
Q: Would loosening or lifting US sanctions on Venezuelan crude help lower the price of oil?
A: Venezuela produces 750,000/800,000 barrels of oil a day and the maximum it could produce in the next six months is around 950,000 barrels a day, maybe even a million. That’s very little compared to Russia, which produces 11 million barrels a day and exports 7 million. In other words, Venezuela would not help stop the price of oil from rising. If the US suspends the purchase of Russian oil, Venezuela could very partially help solve the problem of some US refineries in the Gulf of Mexico that currently use Russian oil. But it is simply a matter of temporary supply, if there was no Venezuelan oil it would be solved with other oil. After all, the price of oil and gasoline in the United States is determined by the international market, not by what Venezuela can export.
Q: Would the lifting of US sanctions on Venezuelan oil benefit Western oil companies?
A: In Venezuela, there are only three relevant western oil companies left: Chevron, (Italian) Eni and (Spanish) Repsol, the last two essentially dedicated to gas. These three companies would benefit greatly if there were some collection mechanism, as they have been accumulating gigantic liabilities with PDVSA. In the case of western oil companies that have already left, such as Total, Equinor, BP, they would hardly be interested in returning to Venezuela until there was a new institutional framework.
Q: The Russian invasion of Ukraine caused oil prices to soar. How can Venezuela be affected?
A: What is happening with Russia could affect Venezuela for two reasons, and that could make Nicolás Maduro interested in reaching an agreement with the US and not let him go so smoothly despite the price of oil being so high. , which benefits you. First, because the way Venezuela escapes sanctions is through Russian banks. So, as Russian banks are being sanctioned, this could hamper the flow of money to Venezuela. Second, because if the Russians cannot export to the US, they will try to export to China, the most important non-Western market in the world and to which Moscow already sells more than a million barrels. And that could be very bad for Venezuelan oil sold in China.
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