U.S. Revives Venezuelan Mining Sanctions, Oil & Gas Could Follow

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Researched by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--The U.S. reimposed mining sanctions on Venezuela this week, following the Venezuelan Supreme Court's decision to uphold an election ban on leading opposition candidates. The move comes amid heightened tensions in the South American nation, which has yet to announce when it will hold its next presidential elections.

As part of Monday's sanctions, the U.S. is demanding companies cease any operations involving CVG Compania General de Mineria de Venezuela CA (also called Minerven), the state-owned mining company, by February 13.

Last week, the Venezuelan government reported that it had uncovered a series of assassination attempts against President Nicolas Maduro, leading to the arrest of 33 people. Later in the week, Venezuela's Supreme Court upheld electoral restrictions against top opposition candidates, including leader Maria Corina Machado, banning them from running in this year's presidential contest.

The electoral ban review was part of a political treaty signed between the government and its opposition in Barbados last year, with the objective to return to normalcy and democracy in Venezuela.

The newest sanctions could open the door to the U.S. reimposing oil sanctions on Venezuela. In October, the U.S. treasury issued a six-month license allowing companies to purchase Venezuelan crude and invest in the nation's oil sector.

This triggered a wave of deals in Venezuela, including agreements with Trinidad and Tobago and Shell plc (NYSE:SHEL) (London, England) to exploit the natural gas Dragon Field.

Between January and October 2023, the U.S. imported 130,000 barrels of oil per day (BBL/d) from Venezuela, through Chevron Corporation's (NYSE:CVX) (San Ramon, California) sales.

The October license expires in April, when the U.S. could reimpose harsh sanctions on Caracas and again restrict the country's oil flows to the market, especially the U.S. Gulf Coast. This decision could spur a U-turn among international companies that are considering reinvestment in Venezuela's crude, thus delaying Petróleos de Venezuela S.A.'s (PDVSA) efforts to boost production to 1 million BBL/d.

At the same time, the U.S. could choose to restrict Venezuela's oil exports to international markets, but keep Chevron's license to operate in the country.

John Kirby, the Biden administration's coordinator for strategic communications, said Venezuela's government has "until April. They need to make the right decisions here and allow opposition members to run for office and release the political prisoners that they're holding right now."

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