The US grants licenses to 5 oil companies in Venezuela: details and conditions
In a significant development in the global energy sector, a recent report by Bloomberg revealed that the Trump administration has issued special licenses to five major Western oil companies to resume or continue their operations in Venezuela. This strategic move comes as part of Washington's efforts to support Venezuela's ailing oil sector and revive its economy, which has suffered for years under the weight of harsh sanctions and financial collapse.
Details of the decision and the financial oversight mechanism
The report clarified that these licenses are not a blank check, but rather come with strict financial conditions that ensure Washington maintains control. The US administration requires the beneficiary companies to transfer all payments and financial proceeds from their operations through bank accounts under direct US supervision and control. This complex procedure aims to ensure that the cash proceeds do not flow freely into the Venezuelan government treasury, but are instead used for specific purposes, such as humanitarian aid or repaying previous debts, reflecting Washington's "smart pressure" strategy.
Strategic importance and historical background
This move is significant given Venezuela's position on the global energy map, as the country possesses the world's largest proven oil reserves, concentrated primarily in the Orinoco Belt. However, the country's production has declined dramatically over the past decade, plummeting from levels exceeding 3 million barrels per day to historically low levels, due to mismanagement, underinvestment, and international sanctions. The US decision is interpreted as an attempt to prevent the complete collapse of Venezuela's oil infrastructure and to secure a foothold for Western companies in the face of potential competition from other international powers such as Russia and China, which have extensive interests in Caracas.
Business challenges and investment concerns
Despite the allure of Venezuela's abundant oil and gas reserves, Western companies remain extremely cautious about this opening. Experts point to a long and complex history of disputes, with some of these companies still awaiting the repayment of substantial outstanding debts stemming from previous nationalizations of their assets, as well as debts owed by the Venezuelan state-owned oil company, PDVSA. Consequently, the resumption of operations does not necessarily translate into immediate new investments. Initially, it may be limited to maintaining existing wells and recovering debts through in-kind oil shipments, pending greater political and economic stability.
