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HOUSTON/WASHINGTON, June 5 (Reuters) – Italian oil company Eni SpA and Spain’s Repsol SA could start shipping Venezuelan oil to Europe as early as next month to offset Russian crude, five people familiar with the matter said. , taking over oil-for-debt swaps, were halted two years ago when Washington tightened sanctions on Venezuela.
The volume of oil Eni and Repsol are expected to receive is not large, one of the people said, and any impact on world oil prices will be modest. But Washington’s green light to resume long-frozen Venezuelan oil flows to Europe could give Venezuelan President Nicolas Maduro a symbolic boost.
The US State Department gave the two companies the go-ahead to resume shipments in a letter, the sources said. US President Joe Biden’s administration hopes that Venezuelan crude can help Europe reduce its dependence on Russia and redirect some of Venezuela’s cargoes from China. Getting Maduro to resume political talks with the Venezuelan opposition is another goal, two of the people told Reuters.
The two European energy companies, which have joint ventures with Venezuela’s state oil company PDVSA, can count crude shipments for unpaid debts and overdue dividends, the sources said.
One of the key conditions, one of the people said, was that the oil received “must go to Europe. It cannot be resold anywhere else.”
Washington believes PDVSA will not benefit financially from these cashless transactions, unlike Venezuela’s current oil sales to China, the person said. China did not sign Western sanctions against Russia and continued to buy Russian oil and gas despite pleas from the United States.
Clearances arrived last month, but details and resale restrictions were not previously reported.
Eni (ENI.MI) and Repsol (REP.MC) did not immediately respond to requests for comment.
Washington did not make similar allocations for U.S. oil giant Chevron Corp (CVX.N), India Oil and Natural Gas Corp Ltd (ONGC) (ONGC.NS) and France’s Maurel & Prom SA (MAUP. PA), who also lobbied the United States. The US State Department and Treasury Department will take oil in exchange for billions of dollars of accumulated debt from Venezuela.
The five oil companies stopped swapping oil for debt in mid-2020 amid former US President Donald Trump’s ‘maximum pressure’ campaign that cut Venezuela’s oil exports but did not failed to oust Maduro.
PDVSA did not expect Eni and Repsol to take on any shipments this month, according to a preliminary PDVSA loading schedule from June 3 seen by Reuters.
Venezuelan Vice President Delcy Rodriguez tweeted last month that she hoped the US overtures would “pave the way for the full lifting of illegal sanctions that affect all of our people.”
The Biden administration held top-level talks with Caracas in March, and Venezuela released two of at least 10 jailed U.S. citizens and promised to resume election talks with the opposition. Maduro has yet to agree on a date to return to the negotiating table. Read more
Republican lawmakers and some of Biden’s Democratic colleagues who oppose any softening of US policy toward Maduro have called the US approach to Venezuela too one-sided.
Washington maintains further sanctions relief against Venezuela will be conditional on progress toward democratic change as Maduro negotiates with the opposition.
Last month, the Biden administration allowed Chevron, the largest US oil company still active in Venezuela, to discuss with Maduro’s government and PDVSA future operations in Venezuela. Read more
Around this time, the US State Department secretly sent letters to Eni and Repsol saying that Washington “would not object” if they resumed the oil-for-debt deals and brought the oil to Europe, said one of the sources told Reuters.
The letters assured them they would face no penalties for taking shipments of Venezuelan oil to collect on an outstanding debt, two people in Washington said.
Chevron’s request to the US Treasury to expand its operations in Venezuela came as the State Department sent the letters of no objection to Eni and Repsol. The person familiar with the matter in Washington declined to say whether Chevron’s request remains under review.
The US oil major has received a six-month extension to a license that preserves its assets and US approval to discuss future operations with Venezuelan government officials. Read more
It was not immediately clear whether Washington had approved previous crude oil-for-fuel swaps that European companies had conducted with PDVSA through 2020, swaps that brought relief to gas-starved Venezuela.
China has become the biggest customer for Venezuelan oil, with up to 70% of monthly shipments going to its refiners. Read more
Reporting by Marianna Parraga in Houston and Matt Spetalnick in Washington; written by Gary McWilliams; Editing by David Gregorio
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