Page 8 - NorthAmOil Week 41 2022

NorthAmOil POLICY NorthAmOil

Washington expected to soften Venezuelan

sanctions soon, sources tell WSJ

US-VENEZUELA THE US government may soon scale back sanc- of Venezuela’s ageing power transmission grid
tions on Venezuela government, a move that and municipal water systems.
would allow for the resumption of crude oil According to the Wall Street Journal, US
exports from the South American country to officials did confirm last week that the details of
the US, Europe and other foreign markets. One such a policy shift were under discussion. How-
of the main beneficiaries of such a policy shift ever, Adrienne Watson, a spokeswoman for the
would be Chevron, the US super-major that has National Security Council (NSC), cautioned that
maintained a token presence in Venezuela even “constructive steps from the Maduro regime” Any easing of
after shutting down all of its commercial opera- would be required for the US to consider soften-
tions there. ing the sanctions. sanctions by
Sources familiar with the matter told the Venezuela has a long history of being a
Wall Street Journal last week that the admin- major oil producer. In the 1990s, it saw output the US would
istration of US President Joe Biden was gear- top 3.2mn barrels per day (bpd). However, pro-
ing up to soften the sanctions regime, which duction levels have plummeted since then. The boost the world
includes provisions designed to discourage decline is partly due to corruption, mismanage- oil market’s
investment in Venezuela’s petroleum sector. ment, under-investment and the misallocation
This shift would be conditional on agreement of funds. However, conditions have worsened confidence in
by the government of Venezuelan President since early 2019, when the US government
Nicolás Maduro to re-enter suspended talks on imposed trade restrictions that led most inter- Venezuela as a
the holding of free and fair national elections national oil companies (IOCs) to withdraw from
in 2024, they said. the country and stop importing Venezuela’s supply option.
If Maduro’s regime accepts those terms, the heavy crude.
sources noted, it would be able to access millions Any easing of sanctions by the US would
of dollars of Venezuelan state funds deposited in boost the world oil market’s confidence in
US banks, per the terms of another agreement Venezuela as a supply option. This notion may
struck with the US and some members of Ven- have become more attractive to Washington in
ezuela’s political opposition. Under that agree- the wake of the recent decision by the OPEC+
ment, Caracas is supposed to use these funds to group to reduce production quotas by 2mn bpd
pay for imports of food and medicines, along in response to declining oil prices. Biden has pro-
with crucial equipment to support the operation tested against this move.™

P8 www. NEWSBASE .com Week 41 13•October•2022