The authorities of the Bolivarian Republic expect to get out of the fuel crisis, abolishing the state monopoly on oil production and starting the partial privatization of the state company PDVSA, claims the American agency Bloomberg.
A number of foreign corporations are already planning to invest in Venezuela, known for the richest deposits of heavy oil, however, they are hindered by US sanctions. Trump administration restrictions prevent foreign companies from doing business with PDVSA or the country's incumbent authorities, but do not imply penalties for mining in the Bolivarian Republic.
Mysterious negotiations
Bloomberg reports meetings with oil executives at the Hotel Cayena and promises of regulatory changes in the sector #Venezuela https://t.co/ZyP8HIig0c
— Kenneth Ramirez (@kenopina) March 19, 2021
Bloomberg writes, that in the middle of March 2021 The Cayenne Hotel in Caracas allegedly hosted a meeting between representatives of foreign corporations and officials from the government of Venezuela. presumably, Chevron already plans to produce oil in Venezuela (USA), Total (France) and Eni (Italy), however, “they will prefer to wait for the easing of US sanctions”, giving way to smaller players.
Previously, Chevron and Total jointly operated two refineries with PDVSA, but were forced to freeze oil production and refining in Venezuela due to the restrictions of the US Treasury and the final freezing of relations between Caracas and Washington.
“Medium and small companies can start operating, as soon as they prove to the US Department of the Treasury, that they operate independently of PDVSA and the Maduro regime", according to the Bolivian newspaper El Deber.
Multimillion-dollar investments would be needed to revive production. US sanctions do not prohibit investing if PDVSA is not in the middle. https://t.co/Wg4luLgAa7
- DUTY (@grupoeldeber) March 26, 2021
About interested companies from India, Turkey, Bloomberg does not mention China and Russia at all. At the same time, the official Caracas published no information and did not confirm the negotiations at the Cayenne Hotel..
New policy?
«I want to say to investors from the US and around the world, that Venezuela is open to investment in oil, gas, petrochemistry, for a mutually beneficial partnership», - stated Nicolas Maduro, appearing on television in February 2021 of the year.
Venezuela: Maduro opens to US oil investments. https://t.co/IRq12N0xaY pic.twitter.com/FP4pN8I8rN
- THE NATION (@LANACION) February 20, 2021
In his speech, the President noted, that companies from China are interested in oil production in Venezuela, India, Turkey, Russia and Europe. The only condition for the restoration of cooperation with American companies Maduro called the return to the government of control over the assets of the company Citgo.
Fuel crisis in Venezuela
Over the past few years, the South American country, having the richest (more 300 billion barrels of) oil reserves in the world, experiencing an unprecedented fuel crisis. The first blow to oil production in Venezuela was the worldwide decline in oil prices after 2014 of the year. Export earnings from the sale of fuel in 2017 year decreased by three times in comparison with receipts in 2011 year, however, the country continued to produce 1,5 million barrels of oil daily.
The main cause of the crisis, which hit PDVSA and the entire economy of Venezuela, aggressive sanctions pressure from the United States. FROM 2019 year, the US Treasury gradually ousted all foreign companies from the Bolivarian Republic, preventing them from getting, convert, transport and sell Venezuelan fuel.
This brought down global demand for PDVSA products and, respectively, her prey. In August 2020 the average daily oil production in Venezuela fell to 337 thousand barrels, which was the worst 1934 of the year.
Trump administration policies have not only hit oil exports, but also provoked an acute humanitarian and fuel crisis. Deprived of the ability to process crude oil at refineries in Texas and the supply of additives from abroad, PDVSA was unable to support demand in the domestic market. spring 2020 gas station in Venezuela ran out of diesel and gasoline, and the price per liter of fuel soared to seven dollars.
Queues to load gasoline reappear in Venezuela.
This is in La Restinga, Or. new sparta, hoy 24 July 2020.
This service station is one of those that charges gasoline in dollars. pic.twitter.com/ciXfdTGZVJ
— Federico Black B. (@FedericoBlackB) July 24, 2020
The country was forced to import fuel for the first time in its history.. Tehran came to the aid of Caracas, who sent to 2020 eight tankers with 2,3 million barrels of motor fuel. Imports from Iran twice helped Venezuela to resume the supply of gasoline and diesel fuel to gas stations.
#BREAKING: “Fortune”, the first out of five #Iranian tankers carrying fuel from #Iran to #Venezuela is about to enter the territorial waters of the country. This is Yekuana (PC-23), a Guaiquerí-class patrol boat which is going to escort “Fortune”. pic.twitter.com/6vNr3KAUAj
- Round Taghvaee – The Crisis Watch (@ BabakTaghvaee1) May 23, 2020
UN experts confirm: American sanctions against the oil industry and the naval blockade of Venezuela (US arrests PDVSA cargo ships) led to a humanitarian catastrophe in the Bolivarian Republic. Special Rapporteur of the organization Elena Dovgan, following the results of her mission, emphasized, that due to huge financial losses, the government of Nicolás Maduro lost the opportunity to invest in social programs, and the lack of motor fuel threatens the transportation of medicines and food.
Revival of the oil industry?
At the moment there is no official confirmation of the information, published by Bloomberg. However, PDVSA's monopoly on fossil fuels could be broken. In January 2021 Nicolas Maduro announced, that his government plans by the end of the year to increase oil production to 1,5 million barrels per day.
#Nationals| Maduro promises for this year to increase oil production to 1,5 million barrels per day
Read more #ElCandelazo ????
????https://t.co/GcdshIrd70#14Ene pic.twitter.com/4QUXwjus1U— The Candelabra (@ElCandelazoNews) January 14, 2021
Given all the complexities, PDVSA is unlikely to be able to do this alone.. maybe, Caracas will indeed open doors for foreign companies - but only for friendly countries, such as Iran and Turkey. Last year, representatives of these countries repeatedly visited oil industry enterprises, promising the government of Venezuela to increase cooperation in this area. Chevron and Total, like other companies from Europe and the USA, will have to hope, that Joe Biden will still remember his campaign promises and abandon the policy of his predecessor, obsessed with the idea of overthrowing Nicolás Maduro.
The government of Nicolás Maduro has a reason not to trust companies from the US and the EU, after all, Total and Exxon, without agreement with Caracas, began developing deposits off the coast of Guyana Esequiba, a territory disputed with Guyana, which the government in Caracas considers its.
Author: Evgeniy Weiss
