The Biden administration is reportedly gearing up to wind down sanctions against Venezuela’s authoritarian regime, clearing the way for Chevron to resume its oil operations and reopen U.S. and European markets.
People familiar with the proposal told The Wall Street Journal that any sanctions relief wound hinge on talks between the government of Venezuelan President Nicolás Maduro and the country’s opposition regarding free and fair presidential elections in 2024. So far, such talks have failed to materialize.
Discussions of possible sanctions relief on Venezuela come as President Biden faces mounting political pressure to address rising gas prices ahead of the November midterms. It also comes as the Organization of the Petroleum Exporting Countries (OPEC+) said it would be cutting oil production by 2 million barrels a day, creating another headache for the president.
Such a deal between the U.S. and Venezuela could potentially enrage critics on all sides. Venezuelan opposition leader Juan Guaido has asked the U.S. government for details of Chevron’s expanded license request to operate in the country.
Guaido’s team has also expressed concern that an agreement between Chevron and Venezuela’s state oil company PDVSA underlying the license request would violate Venezuelan law.
Chevon told FOX Business it continues "to conduct our businesses in compliance with the current sanctions framework provided by the U.S. Office of Foreign Assets Control (OFAC) under General License 8."
The oil giant said it is a "constructive presence in Venezuela, where we have dedicated investments and a large workforce who are dependent on our presence."
"We remain committed to the safety and wellbeing of our employees and their families, the integrity of our joint venture assets, and the company's social and humanitarian programs during these challenging times," Chevron said.
The Biden administration has held talks with Venezuela in some capacity since March. But a rapprochement gained momentum on Saturday when Venezuela freed seven imprisoned Americans in exchange for the U.S. releasing two nephews of Maduro's wife who had been jailed for years on narcotics convictions.
Many Maduro supporters remain distrustful of the U.S. "Empire," however, recalling the Trump administration's decision to impose sanctions on a Venezuelan governor who brokered the release of another American, Joshua Holt, in 2018.
Biden has had a hostile relationship with American oil producers since becoming president. On his first day in office, he issued an executive order canceling the Keystone XL pipeline which would have transported more than 800,000 barrels of oil from Canada to the Texas coast per day. Biden has also repeatedly blamed oil companies for this year’s surge in energy prices, which has been partially driven by Russian President Vladimir Putin’s invasion of Ukraine.
Still, it remains to be seen whether a pivot to Venezuela would make alleviate growing fuel costs in the U.S. Once a major oil producer, pumping more than 3.2 million barrels a day in the 1990s, Venezuela’s dilapidated oil industry has been plagued by years of corruption, mismanagement, and environmental degradation, according to reports by oilprice.com.
"The Democrats right now have a harder story to sell on this because sure there's inflation. Sure, there are supply chain issues. But when specifically it comes to oil, they have been so publicly, anti-American oil, that when you start to hear that there's not enough of it, those two dots aren't very hard to connect," Ryan Sitton, a former Texas oil regulator, told FOX Business. "So, Biden is clearly trying to do anything he can do to hold oil prices down, and thereby help keep gasoline prices low, such that it doesn't hit them that hard in the midterms."
Sitton said encouraging Venezuela to produce more oil would run counter to the Biden administration’s purported environmental agenda noting that it would promote the rest of the world staying on the energy source longer.
"I think what they're doing is encouraging people to have access to affordable sources of oil. Of course, it doesn't help the US oil business, which should be our primary focus. And at the same time, it clearly doesn't help their agenda, which is to get off of hydrocarbons in general," Sitton said.
The World Bank's 2022 Global Gas Flaring Tracker Report comparing flaring intensity indicated a barrel of oil produced in the United States was significantly cleaner than what was produced in Venezuela, with only Syria and Yemen ranking worse.
"No question the world is hungry for oil and natural gas but the President is missing the moment to expand production and refining here in the U.S. by constantly looking outward to solve the world’s energy crisis," Jason Modglin, president of the Texas Alliance of Energy Producers, told FOX Business.
FOX Business has reached out to the White House for comment but did not hear back before publication.