The Biden administration said on Saturday it would lift a key oil sanction against Venezuela, marking the first significant crack in a years-long U.S. embargo that could eventually help ease the tight global energy market.
Chevron, the only remaining active U.S. oil company in Venezuela, is part of a joint venture with the country’s state oil company but has been barred by sanctions from operations there. Under a new Treasury Department license, it will be able to resume pumping oil. The limited license stipulates that any oil produced can only be exported to the United States. No profits from its sale can go to the Venezuelan state-owned company but must be used to pay off Venezuelan creditors in the United States.
The move came as the government of Nicolás Maduro held its first formal talks with Venezuela’s opposition coalition in more than a year. Meeting in Mexico City on Saturday, the two sides agreed to ask the United Nations to manage several billion dollars in government funds held in foreign banks that will be unfrozen to help assuage a humanitarian crisis in Venezuela.
The negotiators also agreed to continue talks next month to discuss a timetable for “free” elections in 2024 and human rights issues.
“We have long made clear we believe the best solution in Venezuela is a negotiated one between Venezuelans,” said a senior Biden administration official who spoke on the condition of anonymity under rules set by the White House. “To encourage this, we have also said we were willing to provide targeted sanctions relief.”
The policy “remains open to further calibrating sanctions,” the official said. “But any additional action will require additional concrete steps,” including the release of political prisoners and recognition of opposition legitimacy, as well as unfettered access for U.N. humanitarian missions.
The official dismissed reports that the administration was acting to ease an oil shortage and high energy prices exacerbated by Russia’s invasion of Ukraine. “Allowing Chevron to begin to lift oil from Venezuela is not something that is going to impact international oil prices. This is really about Venezuela and the Venezuelan process,” the official said, where the United States is “supporting a peaceful, negotiated outcome to the political, humanitarian and economic crisis.”
Venezuela has the world’s largest oil reserves, slightly more than Saudi Arabia, although its thick crude is more difficult to extract. But its production faltered due to poor government management even before Maduro took over in 2013 after he death of Hugo Chávez, a former military officer who was elected in 1998.
U.S. sanctions against Venezuela that began 15 years ago on grounds of drug trafficking, corruption and human rights abuses gradually expanded, culminating under Donald Trump’s administration. Trump sharply tightened measures against the state oil company, Petróleos de Venezuela S.A. or PDVSA; the central bank; and individuals and companies. U.S. oil company activities there were almost completely banned.
The sanctions were an attempt to block global revenue from oil sales, and production fell sharply as black market exports have been sold primarily to China and India. When the Venezuelan opposition declared December 2018 elections illegitimate, it recognized Juan Guaidó, the opposition leader in the parliament, as interim president. The United States quickly followed suit, recruiting dozens of other Latin American countries to do the same.
But economic and political pressure on Maduro had little effect, and the Venezuelan people bore the brunt of a failing economy and repression, leading millions to flee to neighboring countries as well as to the United States, where the number of Venezuelan refugees has swelled.
President Biden came to office convinced that Trump’s Venezuela policy had failed, but he took few steps to reverse it, as powerful lawmakers vowed to block any action and the administration retained hopes of winning the midterm votes of anti-Maduro Venezuelans and other Latin Americans in Florida. As recently as the summer, Biden called Guaidó to assure him of continued American recognition and support, even as other governments and members of Guaido’s own opposition coalition were turning away from him and calling for negotiations with Maduro.
The Republican electoral rout in Florida appeared to convince the administration it was time to move. Chevron officials have said it will take some time to get their operations up and running again in Venezuela.
The sanctions change appears to be an agile circumvention of a main complaint of U.S. critics — the possibility that the Maduro government would benefit directly. Under the terms of the license, PDVSA is cut off from any profits its joint venture may make with Chevron.
But Maduro would not be any worse off than he is now, and one crack in the sanctions may lead to others. For the administration, assuming negotiations with the opposition continues toward democratic elections and human rights improvements, any loosening of global energy supply is seen as positive.
In a statement Saturday on the resumption of talks in Mexico, Sen. Robert Menendez (D-N.J.), the chairman of the Senate Foreign Relations Committee and a longtime hard-liner on Venezuela, said that “if Maduro again tries to use these negotiations to buy time to further consolidate his criminal dictatorship, the United States and our international partners must snap back the full force of our sanctions that brought his regime to the negotiating table in the first place.”