Page 4 - FSUOGM Week 21 2022

FSUOGM COMMENTARY FSUOGM

Is Venezuela Europe’s answer

for the loss of Russian oil?

The US government appears to be moving towards loosening restrictions on trade with

Venezuela, at least partly out of a desire to address disruptions on the European oil market

AS NewsBase has previously noted, the US the possibility of a policy shift, and the US gov-
government is reported to be moving towards ernment has made no official announcements
WHAT: loosening the restrictions placed on trade with on this front. (Venezuela’s Vice President Delcy
More reports have Venezuela. Rodriguez, by contrast, posted a statement on
emerged indicating that One source familiar with the matter told her Twitter account trumpeting that Washing-
Washington is looking to Bloomberg last week that Washington was look- ton had authorised US and European compa-
soften sanctions policy. ing to lift some of the sanctions placed on Ven- nies to “negotiate and restart operations” in her
ezuela’s national oil company (NOC) PdVSA. country.)
WHY: According to the source, the policy shift aims to Meanwhile, reports of a possible softening
The US aims to facilitate facilitate crude exports to foreign markets, espe- in the sanctions regime have drawn a frosty
talks between Maduro cially by Eni (Italy) and Repsol (Spain), while response from some US politicians. For exam- The Biden
and the opposition, but also allowing the US major Chevron to rene- ple, Bob Menendez, the New Jersey Democrat
it is also keen to see administration
Venezuela produce more gotiate its Venezuelan licences and smoothing who serves as chairman of the Senate Foreign
oil for export to Europe. the way toward negotiations between President Relations Committee, issued a statement last does not appear
Nicolas Maduro’s administration and the Vene- week criticising the idea of taking Malpi-
WHAT NEXT: zuelan political opposition. ca-Flores off the list of sanctioned individuals. to have a deep
PdVSA is not in a position Other newswires have issued similar reports. Any plan that relies on giving Maduro “a hand- understanding of
to have much of an im- The Associated Press, for example, quoted two ful of undeserved handouts” in the hope that he
pact on European crude senior US officials as saying last week that the will negotiate with his political opponents “is a world oil markets
markets, but it would stir administration of US President Joe Biden was strategy destined to fail,” the statement declared.
interest if it returned to making some limited revisions to the sanctions Menendez later reiterated this sentiment,
the USGC region amidst regime in order to ease the path toward nego- telling reporters: “Removing Flores from the
a broader shift in global tiations between Caracas and the Venezuelan list of sanctioned people is obviously a gift to
trade flows. opposition. Maduro.”
Specifically, the officials said, the Biden For his part, John Barrasso, the top-ranking
administration will remove Carlos Erik Mal- Republican on the Senate Energy and Natural
pica-Flores, PdVSA’s former vice president of Resources Committee, said he did not want
finance and a nephew of Venezuela’s first lady to see the US government striking deals with
Cilia Adela Flores de Maduro, from the US authoritarian regimes such as the one headed by
Treasury Department’s list of sanctioned indi- Maduro. He also urged Washington to make the
viduals. It will also permit Chevron to negotiate US oil and gas industry a higher priority than
its operating licence with PdVSA, though this PdVSA. “Our experience buying Russian energy
permission will not extend to any drilling or should have taught President Biden that buying
production activities, they stated. (They spoke energy from tyrants is a dangerous proposition
to AP on condition of anonymity, as no formal ... Funding despots isn’t in the national interest;
announcements have yet been made on changes supporting American energy is,” he said in a
in US policy.) statement.
More recently, Reuters has said that Chevron As of press time, the Biden administration
will see its licence to operate in Venezuela rein- has not made any official statements about
stated very soon. Four people close to the talks its stance on Venezuela. However, the events
told the news agency on May 24 that the Treas- reported above appear to signal that there is a
ury Department was preparing to renew the US policy shift in the works. Moreover, they also
licence, even though it probably would not agree seem to indicate that one of the considerations
to grant permission to operate on the expanded driving this shift is Washington’s desire to stabi-
terms that the oil company had requested. lise world crude oil markets.
US politicians react US miscalculations
It remains to be seen how quickly these changes Unfortunately, though, they may also indicate
take hold. More than a week has passed since that the Biden administration does not have a
AP and Bloomberg went public with reports on deep understanding of world crude oil markets.

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