US President Donald Trump has announced the cancellation of a “concession agreement” on Venezuela’s energy sector that allowed Chevron to pump and export oil in the sanctioned South American country.
In a post on his Truth Social platform, Trump on Wednesday said he was “reversing the concessions” granted by Joe Biden’s administration in November 2022.
“We are hereby reversing the concessions that Crooked Joe Biden gave to Nicolás Maduro, of Venezuela, on the oil transaction agreement . . . and also having to do with Electoral conditions within Venezuela which have not been met by the Maduro regime,” Trump wrote.
The measures were an effort to coax Maduro, Venezuela’s authoritarian president, into holding free and fair presidential elections.
Though Trump did not mention Chevron by name, it is the only company that was granted a licence to operate with Venezuela’s state-owned Petróleos de Venezuela (PDVSA) in the November 2022 concession. Other licences have been granted to Repsol, Eni, and Maurel & Prom.
Chevron said it was considering the implications of the decision, adding that it conducted its business in Venezuela in compliance with all laws and the sanctions framework provided by the US government.
Analysts said the loss of the Chevron licence would inflict a blow to Venezuela’s oil industry.
“The loss of diluent supplied by Chevron is a major problem — it was a lifeline for their production,” said Schreiner Parker, an analyst at Rystad Energy, a consultancy.
Diluent is a substance oil producers use to thin out the type of heavy crude produced in Venezuela and is critical to its extraction and transportation.
Parker said the loss of diluent could cause Venezuela’s oil production to fall below 500,000 barrels a day, down from just over 900,000 b/d last year.
Despite boasting the world’s largest proven oil reserves and being a founding member of Opec, corruption, mismanagement and US-led sanctions caused the country’s crude production to plummet from about 2.5mn b/d in 2016 to 400,000 b/d in 2020. It recovered last year, in part because of Chevron’s joint venture.
Asdrúbal Oliveros, a director at Caracas-based consultancy Ecoanalitica, predicted the rescinding of Chevron’s licence could cause GDP growth to shrink from 3.2 per cent to 2 per cent this year.
“Obviously, eliminating licenses has a significant impact, not only on growth, but also on the outlook for foreign exchange flows, inflation and devaluation,” Oliveros said.
Maduro was inaugurated as president for a third term in January despite widespread evidence of fraud in last July’s election.
His main rival in that vote, Edmundo González, has since gone into exile while the opposition’s most popular leader María Corina Machado, who was banned from running, is in hiding.
Venezuela’s vice-president Delcy Rodríguez said the decision to cancel Chevron’s licence was “damaging and inexplicable”.
Chevron has been lobbying hard to protect the US concessions.
“In Venezuela, in particular, what you have seen when countries from the west leave, you’ve seen companies from China, from Russia, increase their presence as a result,” chief executive Mike Wirth told the Financial Times in an interview last month.
In late January, Trump’s crisis envoy Richard Grenell travelled to Caracas, where he met Maduro and announced a deal for Venezuela to receive flights of deportees.
More than 7mm Venezuelans have fled economic hardship and repression in the country in recent years, while the Tren de Aragua criminal organisation has expanded internationally, including in the US.