The United States implemented a partial and temporary lifting of the illegal sanctions imposed on Venezuela, after the signing of agreements between the Venezuelan government and a sector of the opposition in Barbados.
The Office of Foreign Assets Control (OFAC) of the US Treasury Department issued an order specifically aimed at relaxing the coercive measures applied against Petróleos de Venezuela (PDVSA) since 2019.
Over two-thirds of these general licenses, as Washington calls them, are directed at the oil and gas sector of Venezuela, which has been seriously harmed by the unilateral coercive measures that limit the participation of investors and other companies in the principal industry of the country.
Why did Washington relax some sanctions on Venezuela? Beyond the political agreement reached in Barbados on October 18, there are some current geopolitical considerations behind the Biden administration’s move, said David Parivisini, a Venezuelan expert in public policies of the energy sector.
Parivisini stated that the lifting of some of the oil sanctions occurred primarily due to the precarious situation of the international oil and gas market.
Moreover there are growing contradictions between the United States and the Organization of Petroleum Exporting Countries (OPEC), especially with Saudi Arabia, which has escalated due to the genocide that Israel is committing against the Palestinian people.
“The Biden administration—its electoral possibilities are directly related to the possibilities of controlling oil prices and the world oil market,” Parivisini said. “If oil prices skyrocket because there is no possibility of improving commerce with the oil producing and exporting countries, the Biden administration will face an electoral disaster.”
Recovery of production
In Paravisini’s opinion, Venezuela should take advantage of this opening to start developing a long-term strategy that will bring investments aimed at recovering production.
According to the last OPEC report, Venezuela produced 733,000 barrels of oil per day (bpd) in September, after a peak of 819,000 bpd in May of this year.
This production has been possible because of the efforts of the oil sector workers in the special production units.
“There is already a strong will to invest in the oil sector. And that is associated with the increase of production,” the expert said.
In this regard, he explained that there are currently two areas for investment: the Orinoco Oil Belt, and the wells that feed the refining networks that Venezuela has inside and outside its territory.
He added that Venezuelan refineries have a capacity of 1,300,000 bpd, and this is expanded to 1,500,000 bpd with the refining networks abroad, including Curaçao, Aruba, and CITGO in the United States.
“So there are two markets that could be expanded in a significant way for Venezuela,” he added.
After the sanctions are partially lifted, PDVSA must enter into a reorganization stage and evaluate some projects. This will take time to mature, he opined.
For this reason, Paravisini does not see it feasible for such recovery to take place in the first four months of 2024, which is the timeframe issued by Washington for the easing of the illegal measures.
“I think we could talk about the first semester of the year 2024 if, in addition, provisions are taken with respect to the arbitrariness of the applications of the measure by the United States,” he emphasized.
These provisions are situated in the Constitutional Anti-Blockade Law for National Development and Guarantee of Human Rights, approved in 2020 by the Venezuelan National Constituent, from which derives the Special Investment Office that is directed by the Office of the Vice President of the Republic and that provides investors with legal protection from sanctions.
“We approved this special law for the protection of companies that want to invest in Venezuela and to save them from the coercive measures,” Paravisini said.
PDVSA should trade in national currencies
Recently, PDVSA carried out transactions with two Chinese companies using digital yuan, in which 1 million barrels of oil and 65,000 tons of gas were purchased from Venezuela.
According to Paravisini, this is a good strategy that is adapted to the new scenario in geopolitics, especially when it is done with countries that are part of the BRICS (Brazil, Russia, India, China and South Africa) that are some of the largest economies in the world.
This strategy also breaks with the hegemonic commercial and financial scheme imposed by Washington through the International Monetary Fund, the World Bank and other organizations that, by applying illegal coercive measures, restrict countries’ access to credit.
“Venezuela already has access to resources in local currencies of one of the countries with which it has strong relations and which is such a powerful country, China, and this resource has immediate applicability,” the expert explained.
Venezuela also has the advantage that many foreign companies are interested in the country’s natural resources and production processes.
- Venezuela has 300 billion barrels of oil reserves, which makes it the country with the largest reserves in the world.
- PDVSA has 50 gas projects in its first class gas portfolio, with all the legal guarantees for international investors.
- 20% of the total oil trade is carried out using the US dollar.
- 43% of the world’s energy reserves belong to the BRICS countries, a geopolitical block that contributes 29% of the global GDP and 46% of oil production.
- The global demand for natural gas will be 87 mbe/d in 2045, according to data from the World Oil Outlook 2023 issued by OPEC.
- The volume of Russia-Venezuela trade agreements has increased by 70% during the last five years.
(Últimas Noticias) by Víctor Lara
Translation: Orinoco Tribune
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