Bloomberg reports an unnamed informed source as saying that the US Government is ready to give Chevron a further extension to operate in Venezuela and export oil to US refineries.
The US Administration in March originally gave Chevron 30 days to wind down its operations in Venezuela. Unfortunately, heavy crude from places like Venezuela is prized among US Gulf Coast refineries, which blend it with the domestically produced lighter oil to maximise capacity.
Indeed, some 240,000 barrels per day (bpd) of Chevron’s Venezuela exports have been heading to these refineries. The US Administration therefore gave Chevron a further 60-day extension, and it looks set to do this again while negotiations between the two countries continue.
Chevron, which also sells Texaco grease and lubricant products in the UK, has a unique status in its ability to operate in Venezuela. This is because the proceeds go to paying off the debt owed to Chevron rather than directly benefitting the regime in Caracas.
Venezuela is heavily sanctioned, and the Trump administration ratcheted this further by imposing 25% secondary tariffs on any country that buys oil from Venezuela. This led to many countries saying they would cease buying Venezuelan crude, but exports continue at a lower level.
The US Administration is currently negotiating with the Maduro Government of Venezuela. While political reform has long been a key ask, the focus has apparently shifted to repatriating illegal migrants to Venezuela. Progress in this area could improve relations and allow Chevron to move ahead with other plans in the country.
