Trump’s plan to revoke Chevron’s license in Venezuela threatens the oil sector’s transparency, risking a return to corruption and diminished revenues. Analysts warn this shift may worsen Venezuela’s economy, increase reliance on shady intermediaries, and lead to irregular migration to the U.S. should foreign oil companies disengage. Chevron’s exit could result in significant revenue losses and destabilize productive capacities in the industry.
US President Donald Trump’s decision to revoke Chevron Corp.’s operating license in Venezuela is likely to push the country’s oil industry back into operations shrouded in secrecy, promoting corruption and selling oil at steeply discounted rates in Asia. Chevron’s presence has introduced much-needed transparency following previous sanctions, which would be endangered under Trump’s new plan.
Chevron’s operations were crucial for preventing revenue losses, which totaled billions for the state-run oil company, Petroleos de Venezuela SA, during the period from 2020 to 2022. Analysts suggest the absence of Chevron would lead Venezuela back to a web of ghost cargo shipments and small traders, eroding revenue and increasing corruption risks.
After Trump announced his intent Wednesday to end the waiver allowing Chevron to increase exports to a seven-year peak, attention shifted to how this could also impact other oil companies producing in Venezuela, like Spain’s Repsol and France’s Maurel & Prom. A withdrawal of Chevron would adversely affect Venezuela’s nascent economic recovery, potentially worsening irregular migration to the U.S.
Chevron has noted awareness of the announcement, reaffirming its commitment to compliance with U.S. laws and sanctions. Following prior sanctions by Trump’s administration in 2019, Venezuela resorted to deceptive practices involving tanker renaming and switching off ship transponders to evade detection when exporting oil.
The impending withdrawal of Chevron could force Petroleos de Venezuela SA (PDVSA) to discontinue reliable sales to U.S. refineries, leading instead to discounted sales in Asia, potentially starvation its revenues by an estimated $3 billion. Furthermore, this shift could impact overall oil production sustainability in the medium term, raising serious concerns for economic stability.
The potential revocation of Chevron’s operating license by the Trump administration poses significant risks to Venezuela’s oil sector, shifting it back to a less transparent, more corrupt operational framework. With billions potentially lost in revenue, this decision could also exacerbate economic challenges and drive irregular migration. The implications stress the importance of sustained international corporate engagement in politically sensitive regions like Venezuela.
Original Source: financialpost.com
