EXCLUSIVE Washington approves easing of sanctions on Venezuela over direct oil supply from US sources

An oil pump painted in the colors of the Venezuelan flag is seen in Lagunillas, Venezuela January 29, 2019. REUTERS/Isaac Urrutia

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HOUSTON/WASHINGTON, March 8 (Reuters) – U.S. officials have asked Venezuela to provide at least some oil exports to the United States as part of any deal to ease trade sanctions against the member country. OPEC, said two people familiar with the matter. .

US President Joe Biden on Tuesday banned US imports of Russian oil in retaliation for invading Ukraine, increasing economic pressure on a key Venezuelan ally.

American diplomats have been working to find energy supplies around the world that can help offset the disruption to Russian oil and gas exports caused by sanctions or war. U.S. officials met Venezuelan President Nicolas Maduro on Saturday in Caracas for the first bilateral talks in years.

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Venezuela has been under U.S. oil sanctions since 2019 and could reroute crude if those restrictions were lifted.

U.S. officials have made it clear their priority is to secure U.S. supplies, the people told Reuters. The officials told their Venezuelan counterparts that any easing of U.S. sanctions would be contingent on Venezuela shipping oil directly to the United States, the sources said.

The United States had not yet made any stipulations on the specific destination of shipments allowed under the sanctions waivers.

The US State Department and Venezuelan state-run energy company PDVSA did not immediately respond to requests for comment.

Chevron Corp (CVX.N), the last U.S. oil producer still operating in Venezuela, could be the biggest beneficiary if a deal is struck with Maduro’s administration. Chevron has been banned from shipping Venezuelan oil from its joint ventures since 2020 and has lobbied to reverse the ban.

A Chevron spokesman declined to comment on the US talks. The company operates “under the current sanctions framework provided by the US Office of Foreign Assets Control,” he said.

The California-based company has a special license that allows it to maintain a low-level presence in the country, solely to provide maintenance and security for its facilities.

With that license set to expire in June, Chevron has sought permission from the US Treasury Department to swap shipments of Venezuelan oil for debt repayment through a revamped exemption, Reuters reported. Chevron wants the revised permit so it can recover hundreds of millions of dollars in unpaid debts and overdue dividends from its joint ventures with PDVSA.

If Washington decides to ease sanctions, Chevron may be able to partially recover production in Venezuela and resume exports to its own refineries and others on the U.S. Gulf Coast, one of the sources said. replacing Russian barrels.

Chevron had no immediate comment.

Little progress was made in the weekend talks as Washington sought to assess the prospects of removing Maduro from his alliance with Russian President Vladimir Putin. But the parties agreed to continue the talks.

The parties established what one person familiar with the matter called “maximalist” negotiating positions. Washington has pushed for free presidential elections and for the release of Americans imprisoned in Venezuela, while Maduro has called for a broad lifting of sanctions.

But the most pressing topic was energy. The parties discussed the return of Venezuelan oil to markets affected by Russian supply disruptions and a workaround allowing PDVSA to temporarily access international bank transfers, the sources said.

The meeting drew strong reactions on Capitol Hill, where New Jersey Senator Robert Menendez and other US lawmakers criticized outreach to Maduro, who faces US sanctions for human rights abuses .

The US commitment comes as Venezuela’s financial lifeline vis-à-vis Russia frays under sanctions against Moscow over its bombardment of Ukraine. Venezuelan funds held in Russian banks blacklisted by Washington have been frozen.

Oil prices rose another 5% on Tuesday to $128 a barrel due to the US import ban on Russia – which stood at 670,000 barrels a day in 2021. Britain said it would eliminate Russian imports gradually by the end of the year.

Last year, Venezuela’s oil production recovered from the free fall and averaged 636,000 bpd. Officials have said this could boost production and exports, but analysts say there is little room for further increases without massive new spending.

However, many US Gulf Coast refiners who imported Russian barrels could potentially resume processing Venezuelan heavy oil and fuel, among their preferred feedstocks for specialized units.

Prior to the sanctions, U.S. Valero Energy (VLO.N), Citgo Petroleum, Chevron and PBF Energy (PBF.N) were among the top U.S. buyers of Venezuelan oil.

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Reporting by Marianna Parraga in Houston and Matt Spetalnick in Washington; additional reporting from Vivian Sequera in Caracas and Gary McWilliams in Houston; Editing by Stephen Coates

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