Daijiworld Media Network - Washington

Washington, Jan 30: The Trump administration has issued a general licence expanding the ability of US oil companies to operate in Venezuela, marking a significant move towards easing sanctions under the new US-backed leadership in Caracas.

The licence, issued by the US Treasury Department on Thursday, allows a wide range of activities aimed at expediting the movement of Venezuelan crude oil. These include exporting, selling, storing and refining oil, provided the activities are carried out by US entities. However, the authorisation does not extend to upstream crude production within Venezuela, where only Chevron Corp currently operates under a separate special licence.

The decision follows Venezuelan lawmakers approving a landmark reform of the country’s hydrocarbons policy, a step US oil executives have long said was crucial for restarting operations in the oil-rich nation. President Donald Trump has said he expects US energy companies to invest billions of dollars to revive Venezuela’s oil sector, which has suffered years of decay due to underinvestment and corruption.

According to officials familiar with the matter, the move reflects the White House’s intent to quickly revive Venezuela’s economy following the US capture of former President Nicolas Maduro.

However, the licence includes several restrictions that could limit its overall impact. It bars transactions involving Chinese-linked entities, even though China had been a major buyer of heavily discounted Venezuelan crude prior to Maduro’s capture.

“This is the first obvious and necessary step to pave the way for energy companies to do business in Venezuela,” said Clayton Seigle, senior fellow at the Center for Strategic and International Studies in Washington. “It effectively waives the prohibition on working with PDVSA,” Venezuela’s state-run oil company, for handling crude. He added that payments to PDVSA must go through US-controlled accounts and that dealings with Chinese-controlled ventures remain prohibited.

The licence also mandates that US law govern all contracts, with any disputes to be resolved within the United States. Additionally, the Treasury Department has required detailed reporting on transactions involving Venezuelan oil sold or shipped to other countries.

The authorisation covers several midstream and downstream operations, including loading oil onto tankers, exporting, transporting and refining crude, as well as allowing “commercially reasonable” payments through physical swaps of crude oil, diluents or refined petroleum products.

The Trump administration plans to maintain indefinite control over future Venezuelan oil sales, with proceeds held in US accounts. Trading firms Vitol Group and Trafigura Group have already begun selling Venezuelan crude that had been stranded in storage due to the US blockade imposed shortly before Maduro’s capture.

Meanwhile, Venezuela’s Acting President Delcy Rodriguez has been actively engaging foreign oil companies, offering more favourable fiscal terms, reduced bureaucratic hurdles and greater private-sector control over the country’s key oil industry.