Blitz Bureau
NEW DELHI: THE US Treasury Department on February 10 issued a general licence to facilitate the exploration and production of oil and gas in Venezuela, a long-awaited step that could help increase output in the country.
Washington has relaxed sanctions on Venezuela’s energy industry since US forces captured President Nicolas Maduro in early January. It previously granted several general licences to facilitate oil exports, storage, imports and sales from Venezuela.
Oil drillers need US authorization to use specialized equipment in Venezuela and to import rigs required to expand the country’s oil output, currently at almost 1 million barrels per day. The US Energy Information Administration said Venezuela’s crude production could see an increase of up to 20 per cent in the coming months.
The new general licence authorizes the provision of US goods, technology, software or services for the exploration, development or production of oil and gas in Venezuela, it says.
The new general licence authorizes the provision of US goods, technology, software or services for the exploration
The permit mandates that any contract for the authorized transactions to be signed with Venezuela’s government or state energy company PDVSA must follow US laws, with disputes to be resolved in the United States. Payments to any sanctioned entity must be made into a US-overseen fund, it adds. The licence does not authorize “the formation of new joint ventures or other entities in Venezuela to explore or produce oil or gas.”
Transactions to maintain oil or gas operations, including equipment repairs for exploration or production were authorized.
The government of interim President Delcy Rodriguez, which took office in January, agreed to a flagship $2 billion oil supply deal with the US that has allowed exports to bounce after reaching minimum levels in December amid a U.S. blockade.
Washington has since drafted an ambitious $100 billion reconstruction plan for the country’s oil industry, expected to allow the expansion of foreign producers and see the entrance of new participants, including oil service providers.
