Italian oil company Eni SpA and Spain’s Repsol SA could begin shipping Venezuelan oil to Europe as soon as next month to make up for Russian crude, five people familiar with the matter said, resuming oil-for-debt swaps halted two years ago when Washington stepped up 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 global oil prices will be modest. But Washington’s greenlight to resume Venezuela’s long-frozen oil flows to Europe could provide a symbolic boost for Venezuelan President Nicolas Maduro.
The US State Department gave the nod to the two companies to resume shipments in a letter, the people said. US President Joe Biden’s administration hopes the Venezuelan crude can help Europe cut dependence on Russia and re-direct some of Venezuela’s cargoes from China.
Coaxing Maduro into restarting political talks with Venezuela’s opposition is another aim, two of the people told Reuters.
The two European energy companies, which have joint ventures with Venezuelan state-run oil company PDVSA, can count the crude cargoes toward unpaid debts and late dividends, the people said.
A key condition, one of the people said, was that the oil received “has to go to Europe. It cannot be resold elsewhere.”
Washington believes PDVSA will not benefit financially from these cash-free transactions, unlike Venezuela’s current oil sales to China, that person said. China has not signed onto Western sanctions on Russia and has continued to buy Russian oil and gas despite US appeals.
The authorizations came last month, but details and resale restrictions have not been reported previously. Eni and Repsol did not immediately reply to requests for comment.
Washington has not made similar allowances for US oil major Chevron Corp, India’s Oil and Natural Gas Corp Ltd and France’s Maurel & Prom SA, which also lobbied the US State Department and US Treasury Department to take oil in return for billions of dollars in accumulated debts from Venezuela.
All five oil companies halted swapping oil for debt in mid-2020 in the midst of former US President Donald Trump’s “maximum pressure” campaign that cut Venezuela’s oil exports but failed to oust Maduro.
PDVSA has not scheduled Eni and Repsol to take any cargoes this month, according to a June 3 preliminary PDVSA loading program seen by Reuters.
Venezuela Vice President Delcy Rodriguez tweeted last month she hoped the US overtures “will pave the way for the total lifting of the illegal sanctions which affect our entire people.”
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