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The United States lifted sanctions on Venezuela’s oil industry after the Nicolas Maduro government reached a deal with the opposition that could see elections held next year.
The deal was the condition that Washington set for the lifting of the sanctions.
As a result of the easing of sanctions, analysts predict Venezuela’s oil production could increase by 25%.
“The United States welcomes the signing of an electoral roadmap agreement between the Unitary Platform and Maduro representatives,” Treasury Undersecretary for Terrorism and Financial Intelligence Brian Nelson said in a news release.
“Consistent with U.S. sanctions policy, in response to these democratic developments, the U.S. Department of the Treasury has issued General Licenses authorizing transactions involving Venezuela’s oil and gas sector and gold sector, as well as removing the ban on secondary trading,” he added.
The statement cautioned that the Treasury reserves the right to revoke any or all of the newly issued licenses in case the “Maduro representatives” fail to stick to their word regarding a new electoral map for Venezuela.
Reports about the deal emerged earlier this month, following a string of signals from Washington it was ready to ease the sanction regime in return for commitments from the Venezuelan government to hold new elections.
The U.S. made the biggest move in that direction last year, when it granted Chevron a license to return to Venezuela, and that was without asking for commitments from the Maduro regime because imports of Russian heavy crude had to be replaced urgently with Venezuelan heavy.
Now, the new license regime would allow financial transactions involving PDVSA, which could boost Venezuelan oil exports significantly.
Crude oil exports from Venezuela last month topped 800,000 barrels daily, which was the second-highest monthly export rate since the start of the year. Most of the exports went to China, Reuters reported in early October.
The increase in exports came on the back of a recovery in production, mainly in the Orinoco Belt which is home to most of Venezuela’s oil reserves.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com