The US Treasury Department has issued a license that allows American companies to supply Venezuela with equipment and technology for oil and gas extraction. At the same time, it prohibits any transactions for Russia and China.
Points of attention
- US Treasury Department issues licenses allowing American companies to supply Venezuela with oil production equipment while prohibiting cooperation with Russia and China.
- Transactions with the Venezuelan government or PDVSA must adhere exclusively to US laws and funds controlled by Americans.
Venezuela's oil industry will not be able to cooperate with Russia and China
The Office of Foreign Assets Control (OFAC) has issued three licenses that set conditions for transactions with the Venezuelan government, state-owned oil company Petroleos de Venezuela SA (PDVSA), and companies in which PDVSA owns 50% or more of the shares.
Under the new rules, any deals with the Venezuelan government or state-owned energy company PDVSA must be governed exclusively by U.S. law. Any disputes will be resolved only in U.S. courts.
Money from the deals should only go to funds controlled by the United States, and the creation of new joint ventures to extract oil or gas in Venezuela is prohibited.
Also, any transactions with companies or individuals from Russia, Iran, North Korea, and Cuba are completely prohibited.
Oil companies will need US permission to use special equipment and import drilling rigs needed to expand oil production in Venezuela.
Russia reacted cynically to the ban on any operations in Venezuela. In particular, the aggressor country's Foreign Minister Sergei Lavrov called it "discrimination."
The US decision to restrict Russia, China, and Iran's access to Venezuelan oil projects is direct discrimination.
Venezuela produces nearly a million barrels of oil per day, and the U.S. Energy Information Administration (EIA) estimates that this figure could increase by 20% in the coming months.
