The war in Ukraine unleashed the crisis in the oil priceafter the sanctions imposed on Russia from United Stateswhich led to a rapprochement between the Joe Biden administration and Venezuelaand could represent an unexpected turn for Caracas, despite the support of Nicholas Maduro to Vladimir Putin.
“The level of reaction of the United States approaching Venezuela is pure political realism. It means that two antagonistic countries can make friends if their interests weigh. Joe Biden wants to hack Russia and move their influence away from the region,” said internationalist Miguel Rodríguez Mackay.
The White House pointed out that the purpose of the delegation that traveled to Caracas last weekend was to address issues such as “energy security.” Experts affirm that the talks revolve around a supply of oil from Venezuela to the US, but what will a return of Llanero crude to the American market depend on?
Lifting of sanctions on Venezuela
In January 2019, the United States sanctioned the state-owned company Petroleos de Venezuela S.A. (PDVSA). The Treasury Department included in the list of the Office of Foreign Assets Control (OFAC) the ban on American companies and individuals from doing business with the firm, which produced 90% of the country’s foreign exchange.
In dialogue with La República, Reinaldo Quintero, president of the Venezuelan Oil Chamber (CPV), specified that one of the immediate measures that can be taken USA is to make the sanctions more flexible “through the authorization of operating, export and supply licenses to each of the companies affected by the measures and thus access bank financing.”
Likewise, the union leader requested the return to the Venezuelan state of the 31 tons of gold reserves, valued at US$ 1,000 million, confiscated by the Bank of England. And it is that the union must pay up to 30% in regular interest rates.
Investment for more oil production in Venezuela
Until 2019, Venezuela produced an average of 877,000 barrels of oil per day; according to Quintero. After the sanctions, with the help of China and Russia, PDVSA produced on average about 400,000 barrels per day in 2020according to information provided by the Oil Minister, Tarek El Aissami, in March 2021. In the period January-December of last year, the production of the state firm grew from 460,000 barrels to 1,058,000 barrels per day; that is, an increase of 598,000 in the twelve months of last year.
“Under an environment of sanctions, we increased production by almost 600,000 barrels,” Quintero said.
One of the companies that could be affected is the state-owned Petróleos de Venezuela (PDVSA). Photo: AFP
However, the businessman also estimated that Venezuela “could achieve a production of up to 1.2 million barrels per day for this year if corrective measures are made, such as the lifting of sanctions, in case the dialogue with the US prospers.” and that major companies such as Chevron Corp. increase their production capacity.
People linked to the case told the Wall Street Journal that Chevron could restore up to 150,000 barrels per day in six weeks. Quintero noted that Spain’s Repsol and India’s Oil and Natural Gas Corporation (ONGC) could add more.
“Chevron and others were allowed to remain in Venezuela for immunity from sanctions, although they were governed by strict restrictions,” Quintero clarified.
As stated by José Raunelli, Investment Manager of Auryn Holdings, Venezuela it also has financial commitments to Russia and China”, such as the US$9 billion investment made by the Russian state oil company Rosneft.
In this regard, the CPV spokesman who “Venezuela yes, it can supply the North American market with the 400,000 or 500,000 barrels it needs and at the same time also meet the commitments it has with other commercial partners”.
Likewise, he admitted that recovering the production of the number of barrels mentioned above “can demand a cost of between five to eight million dollars.”
This last Wednesday, March 9, Nicholas Maduroreiterated that the oil production goal for this year is two million barrels per daywhich would mean an increase of 164.9% compared to the pumping at the beginning of the year, of 755,000 barrels.
“Reaching 2 million will depend on the capacity we have, not in a year, I think in 18 months and in a couple of years,” Quintero refuted when asked about the estimates.
the barrel of Petroleum Venezuelan has a cost of five dollars less than the price of Brent del Mar crude, this implies a decrease of more than 10 million daily for the benefit of the Venezuelan coffers.
“We have to sell under the condition of sanctions, they apply a very high discount of US$17 and the freight, the distance of the costs to Asia are very high; but the advantage is that the cost to North America for freight and service is one sixth, that is, it is one dollar per barrel instead of six or ten dollars to Asia. Venezuela he loses 14 or 15 million a day due to sanctions, a decrease to the treasury”, concluded Quintero.
Source: Larepublica
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