The possibility of tensions in the US-Venezuela relationship has aroused the economic interests of transnational oil companies and Caribbean countries. Since the war in Ukraine affected the demand for fuel and the Venezuelan opposition decided to end the “interim government” of Juan Guaidó, Washington and Caracas have rehearsed some signs of rapprochement that, although modest, could pave the way for putting Venezuela’s energy reserves back into international market.
Opportunities, however, may come up against various political and economic obstacles, starting with the main one: the blockade against Venezuela. Applied since 2014 and tightened as of 2019, US sanctions practically prohibit companies and countries from carrying out any transaction with the Venezuelan state oil company PDVSA. As a result, over the past few years, the company’s productivity and revenues generated by oil, the country’s main source of income, have dropped substantially.
Now, some European companies and Caribbean countries are asking Washington for sanctions relief so they can do business with Caracas. In the case of transnational oil companies, there is a precedent that took place in November, when the US Treasury Department issued a license allowing the energy sector giant Chevron to return to operate in Venezuelan territory.
In a few days, Chevron and the government of Venezuela signed agreements and reactivated production at the four mixed plants that the company operates together with PDVSA. Currently, the plants’ production is at 90,000 barrels a day, but the collection models and operational control are still unknown, mainly because the OFAC license prohibits the transnational company from paying directly to PDVSA.
The agreements aroused the interest of the Italian Eni and the Spanish Repsol. Both had already received an OFAC license that allowed the shipment of Venezuelan oil to Europe, but only as payment for the debt that PDVSA owed to the companies. The operations were quickly rejected by the Venezuelan government for not considering the business advantageous.
::What’s happening in Venezuela::
To the Brazil in factresearcher and political analyst Ricardo Vaz classifies the movement as “a kind of upside-down world, where the companies themselves are the ones that make lobby with the government in the White House”.
“The US had been demanding that US companies with operations in Venezuela accept short-term losses, with the promise that eventually the so-called regime change would come. This shows that US foreign policy is carried out without planning the consequences very well, as we now have this scenario where the very agents who, in general, benefit most from foreign policy are asking for changes because they feel that they can gain more under other conditions. ”, he says.
For the former Minister of Commerce of Venezuela, Gustavo Márquez, the challenge for Caracas now is to resist agreements that may arise from future licenses that do not benefit the country financially or that oblige Venezuela to cede shareholding and operating control of oil production to companies foreign private.
“It seems that the United States is treating the suspension of sanctions as an additional pressure mechanism, as there is not so much flexibility because sanctions are maintained and licenses are used to achieve their purposes and meet their particular interests”, he says to Brazil in fact.
::Less sanctions, more oil: what Chevron’s return to Venezuela means::
Márquez also claims that the end of the blockade is necessary to reactivate the entire Venezuelan economy, but criticizes the agreements signed with Chevron and says that Washington acts to benefit private oil companies.
“It has to be an elimination of sanctions that gives autonomy to the country, we cannot keep our hands tied, even if only the sanctions that suit the United States and transnational companies are eliminated. This is not ending sanctions, it is giving the power to decision to them and that is unacceptable”, he says.
Caribbean, gas and Trinidad and Tobago
Other companies that would benefit from the end of sanctions are the British Shell and British Petroleum (BP). Both are majority shareholders in Atlantic, one of the largest producers of Liquefied Natural Gas in Trinidad and Tobago.
In January, the Caribbean country received a license from the United States to resume importing gas from the platform offshore Dragão, commanded by PDVSA and which is on the maritime border between Trinidad and Tobago and Venezuela and has a reserve of more than 4 trillion cubic feet of natural gas.
The measure was celebrated by the Trinidad government, which would have its access to the raw material expanded and could increase its production. The license, however, does not allow payment of cash transactions to Venezuela, which displeased Caracas and should be an obstacle to future negotiations.
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“They tell a country that is allowed to trade with Venezuela, but cannot pay in dollars or any form of money. It must pay with food or products. This is colonialism, it is a joke to sovereign countries,” said the Venezuelan president. , Nicolás Maduro, in early February.
Also at the beginning of the month, the vice-president of Venezuela, Delcy Rodríguez, received in Caracas the Minister of Energy and Energy Industries of Trinidad and Tobago, Stuart Richard Young. Also participating in the meeting were the Venezuelan Minister of Petroleum, Tareck El Aissami, and the president of PDVSA, Pedro Tellechea.
“What Trinidad and Tobago wants is to activate a pipeline that already exists between the Dragão field and the country to import Venezuelan gas, process it and export it to other countries”, explains Ricardo Vaz.
To the Brazil in facthe says that Shell is the private company that would be in the best position to participate in this process, but that it would be necessary to create a new mixed company with the participation of PDVSA and Trinidad and Tobago, which could make negotiations difficult.
::Without Guaidó, what is left for the US and Venezuela to resume relations?::
“Shell is working with Trinidad and Tobago on other projects in the energy sector and somehow this license issued by the United States was tailor-made for Shell, in the sense that Trinidad has a certain urgency to develop these reserves due to the high energy demand across the Caribbean,” he says.
The search for other sources of fuel by Caribbean countries intensified with the effects of the war in Ukraine and made the Caribbean Community (CARICOM) increase its pressure on the US so that sanctions against Venezuela are eliminated.
The country’s geographical proximity and history of good relationships with its Caribbean neighbors make Caracas a natural supplier of oil and other fuels for the region.
On the 17th of February, the CARICOM countries signed a resolution asking Washington to suspend sanctions in favor of “energy security in the region”. The Caribbean is asking for relief from the blockade so that they can resume PetroCaribe, an agreement created by former Venezuelan President Hugo Chávez that made it possible to sell oil to neighbors at flexible prices and conditions.
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Vaz claims that PetroCaribe was important not only for an energy issue, but also because it reduced the dependence of Caribbean countries on US companies. However, he argues that the resumption of the project is not simple.
“The program was more or less paralyzed around 2018 and to reactivate it it is necessary to eliminate sanctions not only with licenses, but in a broader way, and on the other hand it is necessary to increase Venezuela’s oil production”, it says.
Editing: Patricia de Matos