Caracas: The United States eased sanctions on Venezuela’s oil industry on Thursday, expanding the ability of American companies to operate in the country after the lifting of state control over the sector.
Within an hour of Venezuelan lawmakers voting to open the oil industry to private investment, the U.S. Treasury Department disclosed a series of activities by U.S. energy companies.
The department issued a general license allowing transactions related to the “lifting, exporting, re-exporting, selling, reselling, delivering, storing, marketing, buying, delivering or transporting petroleum originating in Venezuela.”
The approved activities include oil refining, the license states.
Venezuela’s acting president Delcy Rodriguez hailed the reform as a “historic leap.”
“We are taking important steps,” Rodriguez said after a call with US President Donald Trump.
For the future
Trump pushed Caracas to open its oil fields to US investors after toppling his socialist arch-nemesis Nicolas Maduro in a deadly US bombing raid on Caracas on 3 January.
The US president backed Maduro’s deputy Rodriguez to take over, with the caveat that she give Washington access to the world’s largest proven oil reserves.
Rodriguez has appeared eager to comply with his demands, arguing that an influx of foreign capital is needed to revive the battered Venezuelan economy.
The reform, passed on Thursday, paves the way for the return of US energy majors, two decades after socialist firebrand Hugo Chavez seized foreign oil fields.
It amends a 2006 law that forced foreign investors to form joint ventures with state oil company PDVSA, which insisted on a majority stake.
Jorge Rodriguez, head of parliament and brother of Venezuela’s new acting president, said the reform would help the country recover from years of living under US sanctions.
“Only good things will come after suffering,” he said as he passed the law “for history, for the future.”
Trump has said that Washington is now “in charge” of Venezuela and Rodriguez will “turn over” millions of barrels of oil to be sold at market price.
Rodriguez has already plowed $300 million from an initial U.S. sale of Venezuelan crude into propping up the country’s struggling currency, the bolivar.
Slow recovery
Venezuela sits on about a fifth of the world’s oil reserves.
It was once a major supplier of crude oil to the United States, and several American companies operated in the country until 2007, when Chavez led a new wave of nationalizations.
The industry is undergoing a slow recovery after being hit by years of underinvestment, corruption, mismanagement and six years of US sanctions.
It reached production of 1.2 million barrels per day by 2025, a milestone compared to the 300,000 per day produced in 2020, but a far cry from the 3 million achieved at the turn of the century.
Trump, who has praised Rodriguez, has pushed oil executives to invest in Venezuela.
Exxon Mobil and ConocoPhillips left in 2007 after refusing to cede majority control to the state.
Chevron is the only US company still operating in Venezuela under a special sanctions waiver.
The revised law gives private actors greater guarantees, renounces state control of investigations and lowers taxes and royalties.
“This obviously completely dismantles Hugo Chavez’s oil model,” said oil analyst Francisco Monaldi, while pointing out that the state will retain some discretion over the awarding of contracts to private players.
New fields
The US Department of Energy has already unveiled a plan to develop Venezuela’s oil industry and has begun marketing Venezuelan crude.
Rodriguez says the reform will bring money to “new fields, to fields where there has never been investment and to fields where there is no infrastructure.”
The changes provide cause for optimism for many in a country struggling with economic collapse and mass emigration.
“This hydrocarbon reform helps restore our dignity,” Karina Rodriguez, an employee of PDVSA, said at a recent meeting.
