The United States has renewed a license that will extend the authorization to select oilfield services companies to keep assets in Venezuela. The license does not allow the companies to drill, process, or handle Venezuelan-derived crude oil, Reuters reported on Tuesday.
The license to preserve oilfield assets was originally granted back in 2019 to U.S. oilfield services providers Baker Hughes, Halliburton, Schlumberger, and Weatherford International. The license allows them to maintain a physical presence in the country, including their assets, but does not allow them to perform any operations with PDVSA or any JVs, including well maintenance.
Chevron also secured a license—but Chevron’s license is more extensive. Chevron is the only U.S. company allowed to do business in Venezuela after obtaining a six-month license to operate under its joint ventures with PDVSA. Profits from Chevron’s Venezuelan-derived crude oil will go towards paying down PDVSA’s debt to Chevron, and will not contribute to the state-run oil company’s profits.
Venezuela’s oil industry has been hit hard by corruption, mismanagement, and U.S. sanctions. Venezuela relies heavily on crude oil revenues to finance its budget. For 2023, Venezuela was planning to finance 63 percent of its budget with oil revenues.
Venezuela’s oil exports did increase in March, reaching their highest levels since last August, carried mostly by Chevron’s activity there. Venezuela exported nearly 775,000 bpd in March, with China, its largest buyer.
Some oilfield services companies, including Baker Hughes, had pushed last year to restart drilling in the sanctioned South American country, with analysts suggesting that doing so could boost Venezuela’s crude production back above 1 million barrels per day.
The oilfield services firms have been prohibited from conducting business in Venezuela since 2019.
By Julianne Geiger for Oilprice.com
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