Exclusive: US will allow two companies to send Venezuelan oil to Europe

HOUSTON/WASHINGTON, June 5 (Reuters) – Italian oil company Eni Spa and Spain’s Repsol SA may begin shipping Venezuelan oil to Europe as soon as next month for Russian crude, five people familiar with the matter said, Resumption for oil – The debt swap stopped two years ago when Washington imposed sanctions on Venezuela.

Oil Eni and Repsol volumes are not expected to be large, one of the people said, and any impact on global oil prices will be minor. But Washington’s nod to restart Venezuela’s long-frozen oil flow into Europe could provide a symbolic boost for Venezuelan President Nicolas Maduro.

The US State Department in a letter allowed both companies to resume shipments, the people said. US President Joe Biden’s administration hopes Venezuelan crude could help Europe reduce dependence on Russia and redirect some of Venezuela’s cargo from China. Two people told Reuters that another objective was to persuade Maduro to resume political talks with Venezuela’s opposition.

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The people said the two European energy companies, which have joint ventures with Venezuela’s state-run oil company PDVSA, could count crude toward unpaid debt and late dividends.

One of the people said that a key condition was that the oil obtained “has to go to Europe. It cannot be sold anywhere else.”

The person said that Washington does not believe that PDVSA would benefit financially from these cash-free transactions, as opposed to Venezuela’s current sales of oil to China. China has not signed off on Western sanctions on Russia, and continues to buy Russian oil and gas despite US appeals.

Authorization came last month, but details and resale restrictions have not been previously reported.

anise (eni.mi)declined comment, citing a policy not to comment “on potential commercial sensitivity issues.” Repsol (REP.MC) Did not respond to requests for comment.

other excluded

Washington has not made similar allowances for US oil major Chevron Corp.(cvx.n)Oil and Natural Gas Corporation of India Limited (ONGC) (ONGC.NS) and France’s Maurel & Prom SA(MAUP.PA)Which also lobbied the US State Department and the US Treasury Department to take oil from Venezuela in exchange for billions of dollars in accumulated debt.

All five oil companies halted oil swaps for debt in mid-2020 amid former US President Donald Trump’s “maximum pressure” campaign that cut Venezuela’s oil exports but failed to oust Maduro.

PDVSA has not scheduled Eni and Repsol to pick up any cargo this month, according to a June 3 preliminary PDVSA loading schedule seen by Reuters.

Venezuela’s Vice President Delcy Rodriguez tweeted last month that she hopes the US initiative will “pave the way for the complete removal of illegal sanctions affecting our entire people.”

Outreach to Caracas

The Biden administration held its highest-level talks with Caracas in March, and Venezuela freed at least two of 10 US citizens jailed and promised to resume election talks with the opposition. Maduro has yet to agree a date to return to the negotiating table. read more

Republican lawmakers and some of Biden’s fellow Democrats, who oppose any softening of US policy towards Maduro, have described the US approach to Venezuela as one-sided.

Washington says sanctions relief on Venezuela will be based on progress toward democratic transition as Maduro talks with the opposition.

Last month, the Biden administration authorized Chevron, the largest US oil company operating in Venezuela, to talk to Maduro’s government and PDVSA about future operations in Venezuela. read more

About that time, the US State Department secretly sent letters to Eni and Repsol saying that Washington “wouldn’t mind” if they resumed oil-loan deals and brought oil to Europe. , one of the sources told Reuters.

Two men in Washington said the letters assured them they would not face any penalties for taking Venezuelan oil cargoes on pending debt.

Cheven Thoughts

Chevron’s request to the US Treasury to expand its operations in Venezuela came after the State Department issued a no-objection letter to Eni and Repsol. A person familiar with the matter in Washington declined to say whether Chevron’s request was pending.

The US oil major received a six-month continuation of a license that preserves its assets and US approval to speak with Venezuelan government officials about future operations. read more

It was not immediately clear whether Washington would recover former crude-for-fuel swaps European companies made with PDVSA until 2020, the exchanges said, providing relief to gasoline-thirsty Venezuelans.

China has become the largest customer of Venezuelan oil, with 70% of monthly shipments destined for its refiners. read more

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Reporting by Marianna Paraga in Houston and Matt Spatalnik in Washington; Writing by Gary McWilliams; Editing by David Gregorio and Lisa Shumaker

Our Standards: Thomson Reuters Trust Principals.

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