The U.S. Treasury Department has issued a general license authorizing the provision of U.S. goods, technology, software, or services for the exploration, development, or production of oil and gas in Venezuela.
The license mandates that any contract for authorized transactions signed with Venezuela's government or state energy company, PDVSA, must follow U.S. laws, with disputes to be resolved in the United States. Payments to any sanctioned entity must be made into a U.S. overseen fund, it adds. It also appears to allow service companies to operate freely in the country.
According to Reuters, prior to the lifting of restrictions, oil drillers needed U.S. authorization to use specialized equipment in Venezuela and to import rigs required to expand the country's oil output, which is currently at almost 1 million barrels per day (bpd).
Transactions to maintain oil or gas operations, including equipment repairs for exploration or production, were authorized. Importantly, the license also states that it does not authorize "the formation of new joint ventures or other entities in Venezuela to explore or produce oil or gas."
According to Reuters, many partners and customers of PDVSA, including producers Chevron, Repsol, and ENI, and refiner Reliance Industries, have also applied for individual licenses to expand output or exports.
Last week, Shell CEO Wael Sawan reportedly said that Shell hopes to produce gas from Venezuela's Dragon field in three years and have it processed in Trinidad and Tobago (T&T) for export. To accomplish this, Shell would require a license from the U.S. Office of Foreign Assets Control (OFAC) to operate in Venezuela because of U.S. sanctions.
BP’s Interim CEO, Carol Howle, also recently told Reuters that BP is seeking a license from the U.S. government to develop the Manakin-Cocuina gas fields that straddle the T&T-Venezuela border.
The Energy Chamber of Trinidad & Tobago has for many years promoted proposals to import natural gas from Venezuela to Trinidad & Tobago, for processing in our well developed downstream industrial sector and LNG export facilities. The current moves to lift sanctions are a positive step forward for the T&T energy sector.