By Marianna Parraga
Feb 10 (Reuters) – The U.S. Treasury Department on Tuesday issued a general license to facilitate the exploration and production of oil and gas in Venezuela, a long-awaited step that could help increase output in the country.
Washington has relaxed sanctions on Venezuela’s energy industry since U.S. forces captured President Nicolas Maduro in early January. It previously granted several general licenses to facilitate oil exports, storage, imports and sales from Venezuela.
Oil drillers need U.S. authorization to use specialized equipment in Venezuela and to import rigs required to expand the country’s oil output, currently at almost 1 million barrels per day. The U.S. Energy Information Administration said on Tuesday Venezuela’s crude production could see an increase of up to 20% in the coming months.
The new general license authorizes the provision of U.S. goods, technology, software or services for the exploration, development or production of oil and gas in Venezuela, it says.
The permit mandates that any contract for the authorized transactions to be signed with Venezuela’s government or state energy company PDVSA must follow U.S. laws, with disputes to be resolved in the United States. Payments to any sanctioned entity must be made into a U.S.-overseen fund, it adds.
The license does not authorize “the formation of new joint ventures or other entities in Venezuela to explore or produce oil or gas.”
Transactions to maintain oil or gas operations, including equipment repairs for exploration or production were authorized.
The government of interim President Delcy Rodriguez which took office in January agreed to a flagship $2 billion oil supply deal with the U.S. which has allowed exports to bounce after reaching minimum levels in December amid a U.S. blockade.
Washington has since drafted an ambitious $100 billion reconstruction plan for the country’s oil industry, expected to allow the expansion of foreign producers and see the entrance of new participants, including oil service providers.
Venezuela’s National Assembly in late January approved a sweeping reform of the country’s main oil law granting autonomy for foreign companies to produce, export and cash sale proceeds.
In the 2000s, Venezuela expropriated the assets of some international oil companies that declined to give state-run oil company PDVSA increased operational control, as demanded by late Venezuelan President Hugo Chavez. Several companies including Exxon Mobil and ConocoPhillips have been seeking compensation through the courts.
Venezuela’s main oil partner, U.S. Chevron, said it welcomes the new general license, which coupled with the recent law changes “are important steps toward enabling the further development of Venezuela’s resources.”
Many partners and customers of PDVSA, including Chevron, Repsol and ENI, and refiner Reliance Industries, have applied for individual licenses to expand output or exports.
The large number of individual requests to the U.S. government had delayed progress on plans to expand exports and get investment moving quickly into the country, sources have said.
(Reporting by Marianna Parraga; Editing by Nathan Crooks and Lincoln Feast)
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