Chevron Venezuela Oil Exports Cut by Half Under New U.S. Rules

The U.S. Treasury Department’s revised oil export regulations for Venezuela are significantly curtailing the volume of crude that American energy giant Chevron can ship to the United States. Under the latest framework, Chevron is reportedly able to export only about half of the crude produced by its Venezuelan joint ventures. This adjustment, stemming from U.S. sanctions and a ban on direct payments to President Nicolas Maduro’s government, fundamentally alters Chevron’s operational capacity in the sanctioned nation.

Navigating New Export Restrictions

Issued in late July, the Treasury Department’s restricted authorization permits Chevron to operate and export oil from Venezuela. However, a key stipulation prohibits any form of payment in any currency to the Venezuelan government. To adhere to this mandate, Chevron’s joint ventures in Venezuela are now settling royalties and taxes through the physical delivery of crude oil. This “in-kind” payment mechanism effectively reduces the proportion of production available for export, limiting Chevron’s shipments to an estimated 50% of the 240,000 barrels per day currently produced by these projects.

Strategic Implications of In-Kind Payments

The control over the crude oil used for these in-kind payments rests with Venezuela’s state oil company, Petróleos de Venezuela S.A. (PDVSA). PDVSA can then allocate these barrels for domestic refining operations or for its own export activities. This shift in payment structure represents a marked departure from the previous license granted to Chevron in 2022 under President Joe Biden. That earlier permit allowed Chevron to export its entire output and settle its fiscal obligations in cash, facilitating a more straightforward financial transaction.

Impact on U.S. Supply and Debt Repayment

The practical consequence of these new rules is a reduction in the flow of Venezuela’s heavy, high-sulfur crude oil to the U.S. Gulf Coast. This change also affects the pace at which Venezuela repays its substantial debt to Chevron. Previously, the cash-based payment system had enabled a considerable reduction in the over $3 billion owed to the company as of 2022. With a diminished volume of exportable oil under the current arrangement, the debt repayment process is now proceeding at a slower rate. Furthermore, the joint ventures are reportedly facing operational and capital expenditure constraints due to these new restrictions.

Export Volumes and Future Outlook

Following a four-month hiatus, Chevron recommenced Venezuelan oil exports to the U.S. in August, shipping approximately 60,000 barrels per day. Data from vessel monitoring indicates an average of 102,000 barrels per day exported in September. Chevron CEO Mike Wirth has acknowledged that exportable volumes under the revised terms would be constrained, though specific figures were not disclosed. U.S. officials have consistently stated their intention to prevent the Maduro government from profiting from oil sales, underscoring the geopolitical motivations behind these regulatory adjustments.