LONDON / MEXICO CITY (Reuters) – The United States is considering an October deadline to end exemptions from Venezuelan sanctions that allow some companies and refiners to still receive the South American producer’s oil, two sources said, as Washington seeks to increase heat on President Nicolas Maduro.
FILE PHOTO: A worker stands at a closed gas station of the state oil company PDVSA in San Cristobal, Venezuela, May 17, 2019. REUTERS / Carlos Eduardo Ramirez // File Photo
US President Donald Trump has imposed sanctions on Venezuela’s state-run PDVSA, its key foreign partners and customers since it first introduced measures against the company, and sought to remove the left-leaning Maduro after a 2018 re-election as a shame considered by most Western nations.
Officials in Washington say the failure of sanctions to loosen Maduro’s grip on power has frustrated Trump. When the November presidential election arrives, the US government is preparing for its position on Venezuela, especially the sanctions on its oil and gold industry, the sources said.
The sanctions have already unleashed PDVSA of most of its long-term oil customers, reducing oil exports to less than 400,000 barrels per day (bpd), its lowest level in nearly 80 years.
A handful of European and Asian customers have continued to take Venetian oil under specific authorizations granted by the U.S. Treasury since last year for transactions involving no amount of money to the Maduro administration.
The list includes Italy’s Eni (ENI.MI), Repsol of Spain (REP.MC), India’s Reliance Industries (RELI.NS) and Thailand Tipco Asphalt (TASCO.BK). About a dozen most unknown companies have also emerged as customers this year, according to PDVSA’s export documents.
The U.S. administration is moving to set an October deadline for any waiver of all Venezuelan oil trading, including swaps and payments of waiver of debt with crude, the sources said.
“What remains of oil business must be completed (by the deadline),” said one of the sources.
A further tightening of sanctions on Venezuela’s main export company would likely increase not only chronic fuel shortages in the South American country, but also shortages of everything from basic nutrients to medicines.
PDVSA, Reliance, Tipco and the US Treasury did not immediately respond to requests for comment.
A State Department spokesman said they were “continuing to talk to companies in the energy sector about the potential risks they face by conducting business with PDVSA.” Repsol, which at the end of 2019 registered 239 million euros in unpaid debt in Venezuela, said operations were fully in line with international laws.
Eni said it worked in full compliance with the U.S. sanctions framework and would continue to do so “in ongoing dialogue with all U.S. relevant authorities.”
Traders and sources from those companies familiar with Venezuela’s export operations said they were not yet informed of the changes. Nearly all of PDVSA’s remaining long-term customers have requested permission from the U.S. Treasury since 2019 to take Venetian oil under non-cash contracts, agreed with PDVSA as a way to receive payment for debt relief or deferred dividends, or to Venezuelan raw material for fuel exchange. In February, the Treasury Office of Foreign Assets Control (OFAC) sanctioned what was then PDVSA’s main trading partner, Rosneft Trading. In March, OFAC followed up with sanctions on another unit of Russia’s Rosneft (ROSN.MM), TNK Trading, and in June they sanctioned two Mexico-based companies that exchange Venezuelan oil for trucks.
Most buyers of Venetian raw materials have since stopped using PDVSA companies to avoid false sanctions, while new – very unknown – clients have emerged in recent months, taking charge under complicated transactions that often go overboard and multiple re- sale. Venezuela has also recently deepened its dealings with Iran, prompting Washington’s surprise that it occupied 1.1 million tons of Iranian fuel for the border with Venezuela this month, following a US court ruling.
The United States acquired US Chevron Corp in April (CVX.N) and a handful of U.S.-based oil service companies through Dec. 1. to shut down all operations in Venezuela. Chevron had stopped trading in Venezuelan crude in March, and in July it wrote off its entire investment in the country.
Chevron did not immediately respond to a request for comment.
Even though the U.S. government cites Venezuela’s plummeting oil exports as a success of its sanctions policy, some officials have privately acknowledged that the application has been inconsistent.
Report by Jonathan Saul in London, Marianna Parraga in Mexico City and Humeyra Pamuk in Washington. Additional reports by Nidhi Verma in New Delhi, Clara-Laeila Laudette in Madrid, Stephen Jawkes in Milan, Devika Krishna Kumar in New York, Jennifer Hiller in Houston, Daphnne Psaledakis in Washington and Chayut Setboonsarng in Bangkok; Edited by Daniel Flynn and Marguerita Choy
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