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Foreign oil companies currently doing business with Venezuela’s state-run oil company are growing increasingly nervous about their relationship with PDVSA as the US turns up the heat on sanctions against the Maduro regime, unnamed Reuters sources have said.
The United States’ latest round of sanctions froze all Venezuelan government assets in the United States, and it also threatened to sanction individual firms. The increase in pressure by the United States has companies such as Equinor, Total, and Repsol wondering if they too will find themselves the target of the sanctions.
The verbiage of the latest sanctions did not specifically call out non-US oil companies, but it did mention it would freeze the US assets of any entity that “materially assisted” the Venezuelan government, which by definition includes PDVSA.
US National Security Adviser John Bolton elaborated on the latest round of sanctions, saying last week that companies could choose: do business with either the United States or Venezuela—not both.
Even if the oil majors doing business in Venezuela manage to dodge a direct hit from US sanctions, they may still be edged out should banks they rely on decide to stop doing business with anyone tied to Venezuela.
Either way, oil firms doing business in Venezuela are finding themselves between two rather hard places. Venezuela has already suggested that any oil assets left unattended within its borders will be considered abandoned. The oil assets would then be confiscated and turned over to PDVSA.
Venezuela, too, is in a tight spot. Should foreign oil companies bail on the country in crisis, Venezuela’s oil production will fall even more. PDVSA’s last hope is in Russian and Chinese oil companies, who have been loyal to the Maduro regime from the start.
It is a matter now of who will blink first, with the US likely being purposefully vague in its most recent sanctions threat so it would be able to act on it if it wants to, without being obliged to.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.