CARACAS, Venezuela — The Trump administration lifted a key barrier to U.S. firms seeking to trade Venezuelan oil on Thursday, easing some sanctions on the industry shortly after the socialist government in Caracas passed legislation that improves opportunities there for foreign investors.
The Treasury Department, which previously required U.S. firms to apply for limited-term individual exemptions to work with Venezuela’s state-run oil company, announced a general license permitting U.S. companies to buy, sell, transport and refine Venezuelan oil, among other activities.
The steps came weeks after U.S. forces captured President Nicolás Maduro and President Donald Trump said he would work with Maduro’s vice president, Delcy Rodríguez, to exploit the world’s largest proven oil reserves.
The limited license does not explicitly allow for the production of Venezuelan oil or new investment in the country, said Francisco Rodríguez, a Venezuelan economist at the University of Denver. It appears to be aimed at oil traders, allowing any firms that wish to sell or resell Venezuelan oil to do so without a specific license.
In early January, the Trump administration had granted confidential licenses to Vitol and Trafigura, two global trading houses that had previously been prosecuted for bribery schemes involving oil sales elsewhere, court records show.
For companies looking to produce oil in the country, the U.S. government appears to be continuing a so-called “Chevron model,” requiring specific licenses similar to the one granted to U.S. energy giant Chevron last year.
Geoff Ramsey, a senior fellow at the Atlantic Council and Venezuela expert, says the license also does not prohibit the Venezuelan government from receiving taxes and royalties from companies operating in the country. “It’s not necessarily true that the Venezuelan government will get no proceeds directly from Venezuelan oil sales,” Ramsey said.
Secretary of State Marco Rubio said the United States will manage how Caracas spends its oil profits. In a Senate Foreign Relations Committee hearing, Rubio said that U.S. officials were establishing a procedure to audit that spending and that the administration had already released an initial $300 million in funding for government workers while holding $200 million in a Qatari bank account.
The government of Delcy Rodríguez will submit a “budget” to the Trump administration every month, Rubio said.
But Ramsey said questions remain about how that fund will be managed and what the relationship between the two governments will look like.
“It’s difficult for me to envision Delcy Rodríguez submitting a detailed budget to the White House every month for approval,” Ramsey said. “At the end of the day, this is not a government that is known to simply roll over and go along with whatever Washington says.”
Trump on Thursday also signed an executive order that would impose tariffs on goods from countries that supply oil to Cuba.
Just before the Treasury Department released the general license, and under pressure from Washington, Venezuela’s National Assembly unanimously approved legislation on Thursday overhauling the government’s oil industry law. The legislation “completely tears apart the [Hugo] Chávez model of the oil sector,” said Francisco Monaldi, director of the Latin America Energy Program at Rice University.
The new law, passed by a legislative body controlled by the country’s socialist government, allows for a broad opening to private investment, reducing the taxes and royalties companies must pay the Venezuelan government. It opens the door for the private sector to sign much more attractive contracts, with clauses allowing for international arbitration.
“In reality, it’s everything that foreign investors could have wanted, in the sense that now they can almost negotiate the kind of contract they want,” Monaldi said. “It’s incredible that something so broad was approved.”
But the companies that hope to sign contracts authorized by this new hydrocarbons law will still require a separate license.
While the law was being discussed, supporters of the Venezuelan government demonstrated in the streets of Caracas “to defend the oil industry” and support the new law. A few months ago, demonstrations demanded the opposite — that the U.S. stay away from Venezuelan oil and other resources.
“Today is a historic day for our republic,” National Assembly President Jorge Rodríguez said after the approval of the law Thursday. “The goal of this law is for us to stop saying that we are the main reserve and start saying that we are the main producers.”
He said that the law was approved while maintaining “the principles of sovereignty and the principles of independence established in the constitution.”
Schmidt reported from Mexico City.
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