January 18, 2020 / 5:13 PM / a month ago

U.S. grants Chevron another three months for Venezuela operations

CARACAS (Reuters) - The U.S. Treasury Department on Saturday granted permission for Chevron Corp, the last major U.S. oil company operating in Venezuela, to continue working in the country until April 22.

FILE PHOTO: The logo of Chevron is seen at the company's office in Caracas, Venezuela April 25, 2018. REUTERS/Marco Bello/File Photo

The United States last year imposed sanctions that barred imports of Venezuelan oil and transactions made in U.S. dollars with Venezuela’s state-run oil company PDVSA. The move was designed to starve the country of oil dollars and oust President Nicolas Maduro.

The restrictions cut Venezuela’s oil exports by 32% last year, but Maduro has remained in power, supported by PDVSA and the country’s military.

Chevron and oilfield service firms Baker Hughes Co, Halliburton Co, Schlumberger NV, and Weatherford International have regularly received permission to remain in the country. The four oilfield service firms have largely ceased operations there.

The extension was a win for some Trump administration officials, including Secretary of State Mike Pompeo, who see value in keeping the company in Venezuela, which has the world’s largest reserves of oil.

Chevron has been in Venezuela for nearly 100 years and has kept about 300 direct employees there through years of turmoil. The company’s Venezuelan oil and gas production has been falling and was about 32,000 barrels per day during the most recent quarter for which figures were available.

A Chevron spokesman declined comment. Representatives for Baker Hughes, Halliburton and Schlumberger were not immediately available to comment.

The company posted a $104 million loss on its Venezuela operations for the nine months ended Sept. 30. It would lose about $2.7 billion in assets if required to leave the country, Chevron has said.

A 1 million-barrel cargo of Venezuelan crude consigned to Chevron was scheduled to load this month at Venezuela’s Jose port, according to internal PDVSA documents seen by Reuters.

The operation does not violate sanctions and proceeds from the oil export are used by a joint venture to cover maintenance costs, Chevron said.

The Treasury Department said the license extension does not authorize transactions related to shipments of diluents, which Venezuela needs to thin its heavy oil for processing.

The Treasury also on Saturday issued a license allowing transactions related to PDVSA’s 2020 bond, which is backed by shares in U.S. refiner Citgo Petroleum Corp. That license begins on April 22, replacing a previous license that last year had authorized transactions from Jan 22.

Reporting by Angus Berwick in Caracas; Additional reporting by Timothy Gardner in Washington and Marianna Parraga in Mexico City; Editing by Gary McWilliams and Matthew Lewis

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