In a recent post on Truth Social, former President Donald Trump announced his decision to reverse the concessions related to an oil transaction agreement dated November 26, 2022. Although Trump did not specifically mention Chevron, it was known that Washington had granted Chevron a license to operate in Venezuela's oil sector on that date. This license was the only one issued by the administration for Venezuela at that time.
The U.S. government has made what Venezuelan Vice President Delcy Rodriguez called a "damaging and inexplicable decision" by announcing sanctions against Chevron. In a statement on Telegram, Rodriguez indicated that such failed decisions have contributed to migration out of Venezuela. Chevron acknowledged awareness of the announcement and said it was evaluating its implications. However, the White House and the U.S. State Department have not yet responded to requests for further details.
Since returning to office in January, Trump consistently stated that the U.S. does not need Venezuelan oil and left open the possibility of revoking Chevron's operating license in the country. During his first term, Trump implemented a maximum pressure sanctions policy against Maduro's government, targeting Venezuela's energy sector. Although the Biden administration initially eased sanctions to encourage fair elections, it reinstated broad oil sanctions in April due to Maduro's failure to meet electoral promises. However, Biden retained the Chevron license and other U.S. authorizations for foreign oil companies.
Tax and royalty payments from Chevron's license have provided a stable revenue source for Maduro's administration since early 2023, significantly boosting Venezuela's economy, particularly its oil and banking sectors. As a result, Venezuela's oil output in 2024 expanded to approximately 900,000 barrels per day (bpd), with exports rising 10.5% to around 772,000 bpd, mainly driven by U.S. licenses.
In early February, Trump claimed that Caracas had agreed to receive all Venezuelan migrants in the United States illegally and facilitate their transportation back home. This development followed a meeting between U.S. envoy Richard Grenell and Maduro in Caracas, which resulted in the release of six U.S. detainees. However, Trump stated in his post that Maduro had not met electoral conditions and was not transporting Venezuelans back to the U.S. at the agreed pace. Consequently, the oil concession agreement would be terminated as of the March 1 option to renew.
It remains unclear what will happen to cargoes of Venezuelan crude currently en route to U.S. ports or those about to depart from Venezuela by the end of the month. Maduro's government has consistently rejected U.S. sanctions, labeling them as illegitimate measures amounting to an economic war aimed at crippling Venezuela. Despite these challenges, Maduro and his allies have praised the country's resilience, though they have also attributed some economic hardships to sanctions.
When the license was initially granted, Chevron was owed about $3 billion by Venezuela. According to sources familiar with Chevron's debt recovery plan, the company expects to recoup approximately $1.7 billion by the end of 2024, as oil output is projected to approach an average of 200,000 bpd. The license's automatic renewal allowed Chevron to expand crude output through joint ventures with state oil company PDVSA and distribute around 240,000 bpd to its refineries and other customers.
For further updates, stay tuned as the situation develops.
