Oil frenemies

Biden looks to Maduro as US seeks to diversify its oil supply and Chevron licks its lips.

Communications between the US and Venezuela resumed last March, with a US delegation travelling to Caracas to meet with senior government officials in an effort towards repairing bilateral relations amid the global energy crisis triggered by Russia’s invasion of Ukraine.

Considering the status of global energy supply, the US is planning to ease sanctions on Venezuela to allow Chevron, the US oil giant, to resume oil extraction in the country and reopen Venezuela’s oil export market to the EU and US. In exchange, the US has been trying to get President Nicolás Maduro to engage in productive conversations with opposition leader Juan Guaidó to solve the political deadlock and economic crisis by establishing the basis of a free and fair election in 2024.

At present, the Biden administration continues to recognise Guaidó as Venezuela’s legitimate President, but opposition leaders feel abandoned after the US overture to Maduro’s regime. Biden has publicly stated his support for Guaidó and claims that he has been consulted about the ongoing communications with senior public officials in Caracas.

Guaidó recently showed his concern about Chevron’s request to operate in Venezuela having also reached an agreement with PDVSA, the Venezuelan state-owned oil company, to renovate their joint ventures. In an exclusive report, Reuters revealed that Guaidó asked both the US and PDVSA about the details of their ongoing negotiations. However, his leverage in the negotiations appears limited as he also continued to lose internal support when Venezuela’s main opposition parties announced their plan to compete in the 2024 elections.

“Guaidó has nothing to do with the negotiations with Chevron,” confirmed a local energy advisor with knowledge of the situation, “the Biden Administration is only keeping him minimally informed. Guaidó’s interim government has become a problem for Biden’s new strategy for Venezuela but I don’t expect that we will see decisive actions until after the US legislative elections. Moreover, all the main Venezuelan opposition parties, except Guaidó’s party Voluntad Popular, want the interim government to end but there is no solution yet.”

“Guaidó has nothing to do with the negotiations with Chevron, the Biden Administration is only keeping him minimally informed.”

Energy advisor, Venezuela

We expect Biden to continue isolating Guaidó as ultimately he needs the support of the Venezuelan opposition so that any deal with Maduro doesn’t look unilateral. A Venezuelan political analyst commented, “Both the Biden Administration and the Venezuelan opposition are seeking some symbolic concessions to politically justify an agreement with the Maduro government. In turn, although they are asking for it, I don’t expect that Biden or the opposition will obtain guarantees for a free presidential election in 2024, under any scenario.”

“Both the Biden Administration and the Venezuelan opposition are seeking some symbolic concessions to politically justify an agreement with the Maduro government.”

Political analyst, Venezuela

Meanwhile, Maduro sees the lifting of sanctions as a crucial step to improve Venezuela’s ruined economy. He affirmed at the latest September OPEC meeting that the country is ready and willing to supply the global oil and gas market in a stable and secure manner. Multinational oil companies are monitoring the situation while, since May, the Italian Eni and the Spanish Repsol have been shipping oil from Venezuela to the EU in an oil-for-debt swap after they received the green light from the US to resume their partnerships with PDVSA.

Granting Chevron a license could also be a huge win for oil services companies, as an executive of one such company confirmed, “There is no concrete information on Haliburton, Schlumberger, Baker Hughes and Weatherford, etc and their role in the framework of the possible licence for Chevron. However, I believe that it is very likely that once Chevron resumes full operations in Venezuela, the Biden Administration will also license the oil service companies as they will be needed, especially given the urgency to add new drills and rapidly increase production.”

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