The United States Treasury Department on Tuesday granted a general license aimed at supporting oil and gas exploration and production in Venezuela, marking a significant move that could lift the country’s crude output.
The decision follows Washington’s easing of sanctions on Venezuela’s energy sector after US forces detained President Nicolas Maduro in early January.
Previously, U.S. authorities had issued multiple general licenses to enable activities related to Venezuelan oil exports, storage, imports and sales.
Energy companies operating in Venezuela require U.S. approval to deploy specialized equipment and import drilling rigs necessary to raise production, which currently stands at nearly 1 million barrels per day.
According to the U.S. Energy Information Administration on Tuesday, Venezuela’s crude production could rise by as much as 20% in the coming months.
The newly issued license permits the supply of U.S. goods, technology, software and services tied to the exploration, development and production of oil and gas in Venezuela.
It stipulates that contracts related to authorized transactions signed with Venezuela’s government or state oil firm PDVSA must comply with U.S. law, with any disputes settled within the United States. The measure also requires that payments to sanctioned entities be directed into a U.S.-supervised fund.
The license does not authorize “the formation of new joint ventures or other entities in Venezuela to explore or produce oil or gas.”
The authorization covers transactions necessary to sustain oil and gas operations, including equipment maintenance and repairs for exploration and production. The administration of interim President Delcy Rodriguez, which assumed office in January, finalized a landmark $2 billion oil supply agreement with the United States, helping exports recover after hitting lows in December during a U.S. blockade.
Washington has also outlined a sweeping $100 billion reconstruction blueprint for Venezuela’s oil sector, designed to expand foreign participation and attract new companies, including oil service providers.
In late January, Venezuela’s National Assembly approved major amendments to the country’s primary oil legislation, granting foreign firms greater autonomy to produce, export and retain proceeds from oil sales.
During the 2000s, Venezuela nationalized assets belonging to several international oil companies that refused to grant expanded operational control to PDVSA, as required by former President Hugo Chavez. Companies such as Exxon Mobil and ConocoPhillips have since pursued compensation claims through legal channels.
Several of PDVSA’s partners and customers — including Chevron, Repsol, ENI and India’s Reliance Industries — have sought individual U.S. licenses to increase output or exports.
Chevron, Venezuela’s largest oil partner from the United States, said its focus “remains on the safety of our people, and the integrity of our assets in strict compliance with all laws and regulations applicable to its business, as well as the sanctions frameworks provided for by the U.S. government.”
Sources have indicated that the volume of individual license applications submitted to U.S. authorities had slowed progress on expanding exports and accelerating fresh investment into Venezuela’s energy sector.
