WASHINGTON (Reuters) – Chevron has been banned from drilling or transporting oil in Venezuela and its assets there are “mothballed” as the Trump administration cracks down on money going to the government of socialist President Nicolas Maduro, a senior U.S. official said.
FILE PHOTO: FILE PHOTO: The logo of Chevron is seen at the company’s office in Caracas, Venezuela April 25, 2018. REUTERS/Marco Bello
Seeking to mount pressure on Maduro, the U.S. Treasury Department late on Tuesday imposed tight new restrictions on Chevron’s joint ventures with Venezuelan state-run oil company PDVSA, which could pave the way for the California-based company’s departure.
The license prohibits Chevron or any American company from drilling, bartering or selling oil or petroleum products with the Maduro government as of Tuesday night, the U.S. official told reporters on a call.
Chevron’s assets “are mothballed and essentially it’s … a de facto wind-down, which allows them to just ensure that their assets remain viable and that the Venezuelan people that work for them are able to continue getting paid during these dire times,” the official added.
The license gives Chevron until Dec. 1 to “wind down” operations in OPEC member Venezuela, but the license could be renewed at a later date, allowing the company to stay there longer.
The action targets what some officials in the administration of President Donald Trump say is a key financial lifeline for Maduro as Washington seeks to stifle trade in Venezuelan crude and loosen his grip on power.
Chevron, which has been in Venezuela for about 100 years, said the new license permits the company to undertake limited maintenance of essential operations in the country.
“We will continue to comply with applicable laws and regulations,” said spokesman Ray Fohr.
Washington has ramped up sanctions on Venezuela in recent months as Trump’s hardline approach has support in the Cuban-American community in south Florida, a key constituency in an important swing state as he seeks re-election in November.
Still, some U.S. officials have privately said Trump is frustrated over the failure of his Venezuela policy to unseat Maduro.
The U.S. Treasury recently blacklisted two trading units of Russian oil giant Rosneft (ROSN.MM), for conducting business with PDVSA. Rosneft had accused Washington of double standards for allowing U.S. companies to continue working in Venezuela.
Asked whether Rosneft has done enough to get sanctions lifted on its trading unit, the official said: “Not yet.
Washington was watching closely to see whether Rosneft Trading “permanently ceases any interaction with the Maduro regime,” the official said.
Chevron last month canceled service contracts and procurement processes at the two joint ventures, a move the company attributed to falling crude prices.
The company said its share of output at its joint ventures with PDVSA dropped 16% in 2019 to 35,000 barrels per day, mirroring the decline in crude output across the country.
Reporting by Matt Spetalnick and Timothy Gardner; Editing by Bernadette Baum