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Yahoo
15-06-2025
- Business
- Yahoo
How the U.S. is Handing Over Venezuela's Oil Sector to China
After coming into office, the administration of President Donald Trump has eliminated licenses for oil companies to operate in Venezuela, despite initial hints that it would continue them, with presidential envoy Richard Grenell's visits to Caracas. This means that sanctions on state-owned PDVSA are fully back on. Chevron, the main U.S. corporation on the ground, is back to having only a secret license for minimum maintenance and security, as it still a shareholder in four joint ventures. In the last few months, this has sparked a question. Is the U.S. government leaving the South American country at the mercy of Beijing? Could Chinese companies replace Chevron in Venezuela? There are two short answers. In terms of oil exports, yes. And this has already happened. Before the first round of economic and financial sanctions hit in 2017, the U.S. took almost 800,000 barrels per day from Venezuela. This figure went all the way down to zero in 2019, with the highest level of restrictions known as 'maximum pressure.' This happened again in May of this year, as Chevron, Repsol and others were blocked by the Treasury Department's Office of Foreign Assets Control (OFAC). So, where does all the oil go? In past years, Caracas was able to strike agreements with Rosneft or with Indian buyers. But as the U.S. introduced secondary sanctions, and now secondary tariffs, there was only one buyer left, the only one that does not fear Washington's threats: China. Reuters has already reported that crude that was produced in joint ventures with Chevron has been on its way to East Asia. And the Chinese market does have the capacity to absorb Venezuelan oil. The only problem is how much PDVSA gets paid, when there is only one buyer on the block—a monopsony. When it comes down to Chinese companies taking over Chevron's operations, this is unlikely to happen in the near to medium term. More than anything else, because it does not need to happen for Beijing to expand its influence and control. The same goes for Moscow or Iran. First, investors have plenty of options before them, from greenfield opportunities to mature fields that only need repairs. Venezuela has thousands of square kilometres with billions of barrels of oil underneath. And most joint ventures are effectively dormant: just 20 out of 64 areas of operation are producing more than 10,000 barrels per day of crude, while most are stuck at 0 or below the 1,000 mark. Second, regime officials will prefer to keep the fields where Chevron invested for themselves. 240,000 barrels per day is a great business opportunity. This means millions of dollars in contracts for goods and services, that used to be managed by a foreign corporation—not anymore, courtesy of President Trump. Can Chinese companies take over Chevron's oil fields? Now, Chinese companies entering Chevron's former operations can definitely happen. Let us start with Productive Participation Contracts (known as CPP for their initials in Spanish), which are a form of production-sharing agreement coupled with exclusive rights to contract goods and services. Hong Kong-based China Concord Petroleum (CCP) has started working in oil fields which are part of a joint venture with Belorusneft, using a CPP. Given that 'Petrolera Bielovenezolana' was not productive—with an average output of just 200 barrels per day—the Venezuelan government effectively put it up for rent. The Venezuelan government is not just signing production sharing agreements in areas where there are joint ventures; it is even figuring a way to normalise this framework. This could include that not just PDVSA, but the other shareholders in the joint venture get paid dividends as well by the CPP company. Thanks to the minimum maintenance license, Chevron is still a partner to PDVSA. But with no way to pay, the Venezuelan government feels entitled to remove it from operational control. In the coming years, it should be no surprise if a new company—Chinese or from any other country—effectively takes over. Here is another point that cannot be overlooked: CPPs are negotiated and signed in secret, since they were created under a special law to bypass sanctions. So far, we only know that CCP, Anhui Guangda Mining Investment and Kerui Petroleum Group have been eyeing up opportunities in Venezuela, but there could be more companies out there that we just do not know of yet. While Anhui Guangda has signed a deal for a greenfield project in the Orinoco Oil Belt—the Ayacucho 2 block—there are reports that these firms have also shown interest in the joint ventures where Petrobras was involved. China's mineral monopsony Oil is only one part of the story. In the mining sector, China and Iran are the only major foreign states. Initially, many U.S. and other Western companies left due to expropriations, especially during Hugo Chávez's expropriation spree between 2007 and 2012. But now, while there is more openness to foreign capital, the OFAC is sanctioning the gold sector, which makes the entire mining industry riskier. India's Jindal Steel & Power was nonetheless able to start up at the Cerro Bolívar iron mines last year. For some minerals, China is the only game in town. An example is cassiterite, a type of rock which contains tin (about 65%) and smaller quantities of tantalum, platinum and other rare minerals. Buyers are keeping production at arm's length, which is mostly done by artisanal mining. But they nonetheless have an outsized influence on the sector—this is a monopsony—and the same is happening with oil. By Elias Ferrer for More Top Reads From t Read this article on
Reuters
11-06-2025
- Business
- Reuters
US judge extends Citgo auction's schedule, moves final hearing to August
HOUSTON, June 11 (Reuters) - A U.S. judge in Delaware has extended the schedule for a court-organized auction of shares in the parent of Venezuela-owned refiner Citgo Petroleum, moving the sales process's final hearing to August 18, according to a filing on Wednesday. The eight-year court case, aimed at compensating creditors for debt defaults and asset expropriations in Venezuela, has endured multiple delays. A first bidding round last year failed to satisfy most of the companies expecting to cash proceeds. Houston-based Citgo, ultimately owned by Venezuela's state oil company PDVSA, is the seventh-largest U.S. refiner. Earlier this year, a $3.7-billion offer by Contrarian Funds' affiliate Red Tree Investments was selected by the court as a starting bid in the second bidding round. The offer includes an agreement to pay holders of a Venezuelan defaulted bond. Red Tree and rival bidders have until June 18 to submit improved offers. A court officer overseeing the auction last month said new bidders were expected to emerge. The new calendar, approved after lawyers representing Venezuela requested more time for due diligence and to secure robust bids, sets July 2 as the deadline for a judge to recommend the auction's winner, with a period for submitting objections through July 9. Judge Leonard Stark is trying to avoid long delays in the last part of the sales process by moving deadlines only at bidders' request. Once confirmed, the auction's winner will need approval by the U.S. Treasury Department, which has been protecting Citgo from creditors since 2019. "While heightened investor engagement may marginally delay the auction hearing, Judge Stark remains on course to finalize proceedings by late Q3 2025," said consultancy Aurora Macro Strategies in a report last week.
Yahoo
06-06-2025
- Business
- Yahoo
Venezuela signs nine oil deals to counter US sanctions
Venezuela's state-run oil company, Petroleos de Venezuela (PDVSA), has reportedly signed at least nine new agreements with foreign service providers, including two Chinese companies, to maintain oil production and sustain foreign currency inflows following the exit of Chevron due to US sanctions. The contracts allow foreign companies to operate existing wells and sell the output, diverging from PDVSA's traditional exclusive trading rights, reported Bloomberg, citing undisclosed sources. These agreements are part of President Nicolás Maduro's strategy to offset the withdrawal of Western oil majors, whose licences expired after the US Government declined to extend sanctions waivers. Chevron, responsible for nearly a quarter of Venezuela's oil production, saw its licence expire in early April, according to Bloomberg. The company had until 27 May to complete wind-down activities. Licences for other US service providers, namely Halliburton, Schlumberger, Baker Hughes, and Weatherford International, also expired in early May. Venezuela Vice-President and Oil Minister Delcy Rodriguez said: 'PDVSA has a plan to keep producing oil despite the US' unilateral coercive measures.' The new contracts allocate operational rights to foreign companies over blocks in Zulia state and the Orinoco Belt, Venezuela's main oil regions. PDVSA will hold at least a 50% stake in the crude output, with the partner companies managing operations and receiving a share of oil sales. These companies will also benefit from certain tax exemptions. PDVSA will finance its portion of investment through crude shipments. The companies involved include Aldyl Argentina, Anhui Guangda Mining Investing and China Concord Resources, according to internal PDVSA documents reviewed by Bloomberg. A US company, North American Blue Energy Partners, affiliated with energy investor Harry Sargeant III's Global Oil Management Group, signed a deal but reportedly withdrew due to the inability to secure a US operating licence. National Assembly Member of the Energy Committee William Rodríguez told the news agency that: 'The only way Venezuela can maintain and increase its production is by relying on private local and international companies that don't care about US sanctions. Unlike 2019, when sanctions first hit, there is a framework in place to operate outside the US banking system and a structured market with ally countries, including China, Iran and Russia.' Unlike earlier joint ventures, these 20-year contracts do not require approval from Venezuela's National Assembly. They are authorised under President Maduro's anti-blockade law, which bypasses traditional legislative processes and restrictions on foreign participation in the oil sector. Although Chevron can no longer produce oil in Venezuela, it holds a waiver to conduct equipment maintenance in the country. PDVSA predicts that the nine blocks under these 20-year contracts will yield a combined 600,000 barrels per day with $20bn (1.97trn bolivars) in capital expenditure, according to the document. The company plans to sign additional contracts in the coming months, partially reversing the oil nationalisation policies of late president Hugo Chavez from the mid-2000s, the report added. "Venezuela signs nine oil deals to counter US sanctions – report" was originally created and published by Offshore Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Yahoo
06-06-2025
- Business
- Yahoo
Spain's imports of Venezuelan oil dry up ahead of US sanctions deadline
MADRID (Reuters) -Spain didn't import crude oil from Venezuela in April, ahead of a key sanctions deadline set by U.S. President Donald Trump's administration. Spain's largest oil company Repsol is among foreign firms operating in Venezuela whose permits to export oil from the country were revoked by the United States. Repsol was given a May 27 deadline to wind down its operations there. Under that permit, Repsol received oil from state oil company PDVSA as payment for debt. The lack of imports in April followed sharp increases in 2024 and earlier this year, according to data released on Friday by Cores, an arm of Spain's energy and environment ministry. Repsol has held talks with U.S. authorities seeking ways to keep operating in Venezuela. Earlier this week, Chief Executive Josu Jon Imaz met with U.S. Energy Secretary Chris Wright. The cancellations of licences came after Trump issued an executive order in March, declaring that any country buying oil or gas from Venezuela would pay a 25% tariff on trades with the United States. Venezuelan President Nicolas Maduro and his government have rejected sanctions by the United States and others, saying they are illegitimate measures that amount to an "economic war" designed to cripple the country.
Yahoo
03-06-2025
- Business
- Yahoo
Venezuela's oil exports stable as buyers in China receive more
(Reuters) -Venezuela's oil exports remained almost unchanged last month as increased shipments to customers in China offset a decline in U.S.-authorized sales, according to vessel-tracking data and internal documents from state company PDVSA. The U.S. Treasury and State departments in March revoked the authorizations they had granted in recent years for PDVSA's customers and partners to export oil from sanctioned Venezuela. They gave the firms until May 27 to wind down transactions. The license expirations and PDVSA cancelling some cargoes to one of its main partners, Chevron, due to payment uncertainties, reduced deliveries to the state company's traditional customers in the U.S. and Europe. However, intermediaries received more cargoes bound for China. U.S. President Donald Trump's administration has increased pressure on Venezuela amid complaints about what U.S. officials have called the OPEC country's lack of progress towards electoral reforms and migrant returns. President Nicolas Maduro's government rejects the sanctions and has said they amount to an "economic war" against Venezuela. The U.S. energy sanctions have been in place since 2019 and companies abiding by them need U.S. authorization to export Venezuela's oil or do business with PDVSA. In May, a total of 30 vessels departed from Venezuelan waters carrying an average 779,000 barrels per day of crude and refined products, and 291,000 metric tons of oil byproducts and petrochemicals, according to the data and documents. In April, the South American country had exported 783,000 bpd of crude and fuel as sales to U.S.-authorized customers began to fall, down from 850,000-900,000 bpd in previous months. In May 2024, oil exports averaged 770,000 bpd, according to the data. China was the largest receiver of Venezuela's oil last month with some 584,000 bpd, above the 521,000 bpd of April. The U.S. received some 140,000 bpd, slightly more than the 130,000 bpd of the previous month. PDVSA did not deliver any cargoes to Chevron or India's Reliance Industries in May, but a large oil swap with joint-venture partner Maurel & Prom and trading house Vitol was completed as planned, marking the last U.S.-authorized deal before the license expirations. The Venezuelan state firm began exporting Boscan heavy crude on its own to Asia, the documents showed. The grade jointly produced with Chevron was feeding U.S. refiners before the license expirations. PDVSA and Reliance did not immediately reply to requests for comment. Vitol and M&P declined to comment. Chevron last week confirmed its license for Venezuela had expired and said its presence in the country remained "in compliance with all applicable laws and regulations," including the U.S. sanctions framework. Venezuela increased fuel imports to some 159,000 bpd in May from 94,000 bpd in April, the data showed, a move to replenish stocks of the heavy naphtha PDVSA needs to dilute its extra heavy output ahead of the reinforcement of U.S. sanctions.
