US to allow Eni and Repsol to send oil from Venezuela to Europe – 05/06/2022

By Mariana Barca and Matt Spettolnik

HOUSTON / WASHINGTON (Reuters) – Italian oil company Eni and Spain’s Repsol will begin shipping Venezuela crude oil to Europe early next month to replace Russian crude, with five sources familiar with the matter resuming oil exchanges that have been suspended for two years. .

The amount of oil that Eni and Repsol are expected to receive is not large, a source said, and any impact on global oil prices will be moderate. But Washington’s green light will give Venezuelan President Nicolas Maduro a symbolic boost to restart the frozen oil flow from Venezuela to Europe.

The administration of US President Joe Biden hopes that Venezuela’s oil will help reduce Europe’s dependence on Russia. The two told Reuters that another goal was to persuade Maduro to resume political talks with Venezuela.

Two European energy companies, in a joint venture with Venezuela’s state – owned oil company PDVSA, have been told by people that they can calculate crude oil exports for unpaid debts and outstanding dividends.

An important condition, he said, was that the incoming oil “should go to Europe. It cannot be resold anywhere else.”

Washington believes that unlike Venezuela’s current oil sales to China, the PDVSA will not benefit financially from these cashless transactions. China has not signed Western sanctions against Russia and continues to buy Russian oil and gas in defiance of US demands. Eni and Repsol did not immediately respond to requests for comment.

Washington has not offered similar concessions to the US – based Chevron, India’s oil and natural gas and France’s Maurel & Prom, which have pressed for oil in exchange for billions of dollars in debt accumulated from Venezuela.

In the midst of former US President Donald Trump’s campaign, all five oil companies stopped trading in oil for credit in mid-2020, which reduced Venezuela’s oil exports but failed to overthrow Maduro.

The Biden administration held high-level talks with Caracas in March, and Venezuela released two of the 10 U.S. citizens arrested and promised to resume talks with the opposition. Maduro has not yet agreed a date for his return to the negotiating table.

Republican lawmakers and some Democrats opposed the easing of US policy on Maduro. Critics say the US approach to Venezuela is one-sided. Washington says the lifting of additional sanctions on Venezuela will be a condition for progress towards democratic change as Maduro negotiates with the opposition.

In May, Biden management allowed Chevron, the largest U.S. oil company still operating in Venezuela, to talk with Maduro and PDVSA about future operations in Venezuela.