US Grants Sanctions License for Chevron, Expects Limited Impact on Venezuelan Oil

The U.S. will allow Chevron to resume certain oil activities in Venezuela, giving the California-based energy company a “limited” license to pump oil in the sanctioned country for the first time in years. The license, which the White House believes will have a minimal impact on Venezuela's oil shipments, was issued in an effort to support the newly restarted negotiations between President Nicolas Maduro’s regime and the country’s opposition party, the Treasury Department said. It also comes amid opposition from U.S. Republicans, who warned the administration that a license would only offer the Maduro regime sanctions relief and undermine prospects for the return of democracy to Venezuela (see 2211020032, 2210280032 and 2210060014).

New General License 41 authorizes a variety of transactions involving Petroleos de Venezuela, S.A. -- the country’s state-run energy company -- by Chevron. The license authorizes the production and lifting of petroleum or petroleum products produced by Chevron's joint ventures and any related maintenance, repair or servicing. It also authorizes the sale, export to or import into the U.S. of petroleum or petroleum products produced by Chevron, provided the products produced are first sold to Chevron. Finally, the license authorizes activities that ensure the health or safety of personnel or the integrity of operations or assets of Chevron’s joint ventures in Venezuela.

Treasury’s Office of Foreign Assets Control also issued two new frequently asked questions. FAQ 1098 explains that U.S. persons are allowed to provide certain goods or services related to Chevron’s activities in Venezuela, and FAQ 1099 clarifies that non-U.S. persons, including foreign financial institutions, generally don’t risk “exposure to U.S. sanctions for facilitating transactions or payments for or on behalf of, directly or indirectly, Chevron, its subsidiaries, joint ventures, or contractors that are authorized” under GL 41.

“This action reflects longstanding U.S. policy to provide targeted sanctions relief based on concrete steps that alleviate the suffering of the Venezuelan people and support the restoration of democracy,” OFAC said.

The White House doesn’t expect the license to have much of an effect on Venezuelan oil exports, said John Kirby, spokesperson for the National Security Council. “I’ll let Chevron speak for this particular issue of sanctions relief, but our expectation is it won't be a lot of oil coming out of there,” Kirby said during a Nov. 28 press conference. “It remains to be seen how much will get drilled down there. It’ll be up to Chevron to decide that. But as a function of the sanction itself, that oil, whatever product is drilled, has to come to the United States.” The general license also bars PdVSA from receiving profits from Chevron’s oil sales, Treasury said.

House Foreign Affairs Committee lead Republican Michael McCaul of Texas, and Senate Foreign Relations Committee ranking member James Risch, R-Idaho, were unhappy with the licenses. “The Biden Administration’s sanctions relief for the Maduro regime in Venezuela shows an alarming willingness to give in to the demands of dictators," they said in a joint statement. "The U.S. should not be preemptively rewarding a narco-terrorist regime that has a history of using negotiations as a tactic for delaying meaningful action, the lawmakers said, noting "any change in U.S. policy toward Venezuela must be contingent on a transfer of power from the Maduro regime to a democratically elected government. We are gravely concerned that this unilateral easing of sanctions will only perpetuate the crisis that Maduro has created for the Venezuelan people."

Along with the new license, OFAC also renewed a general license authorizing certain transactions between certain companies and PdVSA. General License No. 8K, which replaces No. 8J (see 2205270030), authorizes transactions between PdVSA and Halliburton, Schlumberger, Baker Hughes and Weatherford International, with certain restrictions, through 12:01 a.m. EDT May 26, 2023. The license was scheduled to expire Dec. 1. The license also no longer includes Chevron as one of the companies whose transactions are authorized.