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Italy’s Eni and Spain’s Repsol, two major European oil and gas firms, are looking to expand their oil deals with Venezuela with U.S. consent, Reuters reported on Tuesday, quoting sources familiar with the matter.
A potential further U.S. exemption for Eni and Repsol could give the companies access to oil swap deals, which could increase fuel deliveries to Venezuela’s state oil firm PDVSA in exchange for Venezuelan crude to be shipped to Europe.
Under the current sanctions regime, direct payments to PDVSA are not allowed, so companies have sought authorization to offtake some crude from Venezuela as a form of payment for their receivable debts.
Last year, Eni and Repsol were allowed to ship some Venezuelan crude to process at European refineries in order to recover debts and dividends owed to them by Venezuela for their joint ventures in the country holding the world’s largest oil reserves.
Under new terms of oil-for-debt deals, Eni and Repsol could now be authorized to export fuels such as naphtha to Venezuela, according to Reuters’ sources.
The Biden Administration has signaled it could be open to additional special authorizations for oil companies in Venezuela as it seeks to limit the fallout of a tight global supply on U.S. gasoline prices.
The first opening of the Biden Administration to Venezuela occurred at the end of last year when it eased the sanctions to allow Chevron to resume its work in Venezuela and export the crude when access to Russian heavy crude was shut off by the sanctions on Russia over its invasion of Ukraine.
Now there could be an opening in the U.S. Administration to allow more companies – other than Chevron – to export crude oil from Venezuela.
Federal government officials in Washington are reportedly working on a draft proposal for sanctions relief to be offered to Venezuela if it organizes “free and fair” presidential elections.
The pitch focuses on letting more companies buy Venezuelan crude, Reuters reported last week, citing unnamed sources.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com