It is the second time the US has extended an exemption allowing Chevron to operate in Venezuela amid ongoing economic sanctions designed to oust country's leadership

Oil field drilling

Divesting assets from multinational oil and gas firms could cede greater influence to state-owned companies

Chevron and four other US oil companies have been granted permission to continue their work in Venezuela for an additional three months, despite ongoing US sanctions against the South American nation.

The US Treasury extended existing sanction exemptions for Chevron – along with Halliburton, Schlumberger, Baker Hughes and Weatherford International – enabling them to tap into Venezuela’s vast oil resources until January 22, amid ongoing geopolitical tensions between the two nations.

US sanctions against Venezuela’s oil industry are part of an effort by the Trump administration to oust sitting President Nicolás Maduro from power by targeting its economy.

These exemptions are contingent on the companies not exporting any Venezuelan crude oil to the US market, as well as prohibiting “any transactions or dealings related to the exportation or re-exportation of diluents, directly or indirectly, to Venezuela”.

The ban on bringing diluents into the country is an effort to prevent Venezuela accessing the agents required to process stockpiles of its heavy crude oil.


Chevron has a long history in Venezuela

It is the second time this year the Treasury’s Office of Foreign Assets Control (OFAC) has renewed the waiver allowing firms to operate Venezuela – having initially granted a six-month indemnity in January when strict economic sanctions were imposed on the country, before granting an additional three-month extension in July.

Chevron has operated in the oil-rich South American nation for close to a century, and currently has four ongoing partnerships with the state-owned PDVSA oil company – producing a combined total of about 200,000 barrels of crude per day (b/d), of which Chevron’s stake is around 34,000 b/d.

A company spokesperson told Reuters news agency that executives in the country “remain focused on our base business operations and supporting the more than 8,800 people who work with us — and their families”, adding that Chevron is currently reviewing the terms of the latest licence.

There have been contrasting views within the US government about how best to deal with Chevron’s business in Venezuela – with some arguments suggesting a continued presence will be beneficial in the long-term if President Maduro loses power, while others say the oil giant’s work in the country is providing an economic boost.


Despite oil riches, Venezuela’s crude production has been declining

Despite its vast endowment of oil riches – Venezuela is home to the world’s biggest-known oil deposits at around 300bn barrels — production of the resource has slowed considerably in recent years.

Commentators cite under-investment and mismanagement of the industry as contributing factors, as well as the recent tightening of sanctions by the US.

Oil production in the country has fallen from more than two million barrels per day in 2014 to around 600,000 b/d at present.

Venezuela is now the only Latin American country to be member of Opec, following Ecuador’s decision earlier this month to end its association with the intergovernmental organisation of oil producing nations.