Repsol will start sending crude oil from Venezuela to Europe in July | Economie

A worker at the Repsol Cartagena Refinery.
A worker at the Repsol Cartagena Refinery.Francisco Bonilla (Reuters)

Five people familiar with the matter told Reuters that Spanish oil company Repsol and Italy’s Eni will start shipping Venezuelan oil to Europe from next month to offset the ban on Russian crude. In this way, oil-for-debt swaps, compensation for investments and other work suspended two years ago, when Washington intensified sanctions against Venezuela, will be resumed.

The President of Venezuela, Nicolas Maduro, confirmed in a television intervention that the United States allowed Chevron, Eni and Repsol to exploit gas and oil fields in Venezuela. Steps are being taken, first steps. A week or so ago, the US took some minor but significant steps by licensing US Chevron, Italy’s ENI and Repsol to start operations that will lead them to produce oil and gas in Venezuela…for export to their natural markets. Maduro indicated that they are small and light steps.

The change in position comes after the United States allowed European oil companies to operate in Venezuela, while exempting them from sanctions in exchange for steps to resume political dialogue with the opposition. US authorities informed companies last month of the news, but details and restrictions on resales have not yet been communicated.

The administration of US President Joe Biden hopes that Venezuelan crude will help Europe reduce dependence on Russia and redirect some Venezuelan shipments from China. The volume of oil that Eni and Repsol are expected to supply from Venezuela is not high, according to one of the sources, who indicated that the impact on world oil prices will be modest. Eni and Repsol did not respond to requests for comment.

Repsol’s exposure to Venezuelan stocks at the end of the year was €298 million. This figure includes dollar financing for the Cardon IV and Petroquiriquire joint ventures in the amount of €166 million and €304 million, respectively, and commercial loans receivable from Petróleos de Venezuela (PDVSA) for €344 million, less provisions for risks and expenses. 500 million euros, according to figures in its latest annual report.

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The green light from Washington to resume frozen oil flows from Venezuela to Europe could provide a symbolic boost to Venezuelan President Nicolas Maduro. The sources told Reuters that the US State Department gave the two European companies the green light to resume shipments in a letter.

The two European energy companies, which have joint ventures with Venezuela’s state oil company PDVSA, will be interested in balancing crude oil shipments with outstanding debts and accrued profits, but this was not possible at the moment, according to informed sources. The agreements that are initially compensated are new investments and works implemented in Venezuela to produce crude oil and gas. Anyway, there are no cash exchanges one way or the other.

The main condition, according to one of the sources consulted by Reuters, is that the oil received “must go to Europe” and “cannot be resold elsewhere”. Washington believes that PDVSA will not benefit financially from these cashless transactions, unlike Venezuela’s current oil sales to China. Beijing has not signed Western sanctions against Russia and has continued to buy Russian oil and gas despite the Western bloc.

United States exception

Washington did not offer the same concessions to the US oil company Chevron Corp, Indian Oil and Natural Gas Corp Ltd (ONGC), and France’s Maurel & Prom, which also lobbied the US State Department and the US Treasury to be able to operate in Venezuela and trade oil for billions dollars in accumulated debt. The five oil companies suspended oil-debt swaps in mid-2020 amid former US President Donald Trump’s “maximum pressure” campaign, which cut Venezuelan oil exports but failed to oust Maduro.

The Biden administration held talks at the highest level with Caracas in March. Venezuela then released two of the at least 10 imprisoned US citizens and promised to resume talks with the opposition.

Maduro has yet to agree on a date to return to the negotiating table. Republican lawmakers and some of Biden’s Democratic colleagues who oppose any US appeasement of Maduro have criticized the approach to Venezuela as too biased. Washington maintains that further sanctions relief on Venezuela will be conditioned on progress toward democratic change while Maduro negotiates with the opposition.

Last month, the Biden administration allowed Chevron, the largest US oil company still operating in Venezuela, to enter talks with the Maduro government and PDVSA about future operations in Venezuela. According to the estimates of Reuters sources, this was the time when the State Department sent secret clearances to Eni and Repsol, saying that Washington “would not object” if they resumed oil-for-debt deals and brought oil to Europe. Two people in Washington said the United States reassured European companies in letters that it would not face sanctions if they received shipments of Venezuelan oil in exchange for outstanding debts.

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