(Bloomberg, Kevin Crowley, Lucia Kassai and Kevin Cirilli, 25.Jul.2019) — Pressure is mounting on U.S. President Donald Trump to end Chevron Corp.’s 100-year presence in Venezuela as he seeks to exert maximum pressure on the embattled regime of Nicolas Maduro.
Trump will announce his decision on whether to grant the U.S. oil major an extension to its sanctions waiver soon, Secretary of State Mike Pompeo said in an interview with Bloomberg TV.
The waiver allows the oil explorer and several oilfield-service companies including Halliburton Co. and Schlumberger Ltd. to operate in Venezuela despite U.S. sanctions and is due to expire on Saturday. Eliminating it would further damage the country’s collapsing oil industry, a key source of revenue for Maduro’s socialist government. But Trump must weigh this against opening the door for Russian and Chinese interests that could take Chevron’s place.
“We’re trying to ensure there aren’t wealth and resources that are getting into the pocket of Maduro and his cronies and flowing to the Cubans,” Pompeo said. “That’s the objective. Where we make a decision on a license or a particular sanction or a particular designation of an individual, those are all aimed to support the strategy.”
U.S. officials are keen to hasten Maduro’s decline and pulling Chevron out is seen as one of their best weapons, said Fernando Ferreira, an analyst at Rapidan Energy Group.
“Right now, the most likely scenario would be for the Trump administration to let the waivers expire with a 30- to 60-day wind-down period,” Ferreira said.
Chevron’s joint ventures with state-run Petroleos de Venezuela SA produce about 200,000 barrels of oil a day, with Chevron entitled to about 40,000 of those. The company is making the case to the Trump administration that if it were to leave, its assets could be turned over to another operator.
Russia and China have made significant investments over the past decade in Venezuela, home to the world’s largest reserves.
“What’s critical is U.S. business interests are not ceded to the Russians and the Chinese but at the same time they are not helping to prop up the regime,” said Jason Marczak, a director at the Atlantic Council, a Washington-based think tank working with U.S. policymakers on a peaceful transition in Venezuela.
Earlier this week, Venezuela’s opposition-led National Assembly issued a decree that guaranteed Chevron’s assets in the country would be protected under a new government led by Juan Guaido.
That decree serves to “make it easier” for the Trump administration to pull Chevron out and at the same time protect its assets from Russian or Chinese entities, Joseph McGonigle, an analyst for HedgeEye Risk Management, wrote in a note.
Chevron defended its presence in the crisis-stricken country and said it’s “hopeful” the waiver will be renewed. “We are a constructive presence in the country,” the company said in an email. “Our focus is maintaining the safety of the operations and supporting the more than 8,000 people who work with us as well as their families.”