U.S. Administration Expected to Order More Companies to Cease Venezuelan Operations
The Trump administration is likely to compel more companies, including notable oil producers, to halt operations in Venezuela, following Chevron’s recent exit directive. This action seeks to intensify pressure on President Maduro, whose regime relies heavily on oil revenue amidst growing economic challenges. The potential impact on the Venezuelan economy could be profound, with significant revenue losses expected.
The Trump administration is preparing to compel additional companies to cease operations in Venezuela, intensifying pressure on President Nicolas Maduro following Chevron Corp.’s recent order to end its activities there. Companies such as Etablissements Maurel & Prom SA and an asphalt company owned by Florida tycoon Harry Sargeant have been informed they will have 30 days to wind down their operations after their waivers are revoked, with the process potentially starting imminently.
The pressure to halt operations will significantly impact Venezuela’s faltering economy, as Maduro contends with demands for democratic reforms and increased migrant acceptance from the US. Recently, the Treasury Department instructed Chevron to complete its exit from Venezuela by April 3, a considerably shorter timeline than the standard six-month period.
Venezuela’s economy is heavily reliant on oil, and Chevron, alongside smaller entities allowed operation by Washington, has become vital for growth, especially as the state oil company has suffered from years of neglect and underinvestment. The administration appears divided on policy toward Venezuela, and a shift in President Trump’s stance allowing continued oil operations is plausible.
Several foreign companies, including Spain’s Repsol SA and Italy’s Eni SpA, are currently awaiting updates on whether their operational waivers will be revoked, exposing them to sanctions. Joint ventures between Chevron and Petroleos de Venezuela SA are estimated to account for a quarter of the Maduro government’s revenue for 2023 and 2024, suggesting Chevron’s exclusion could lead to a 7.5 percent shrinkage of Venezuela’s economy this year.
Adviser Rick Grenell’s visit to Maduro in January aimed at renewing direct negotiations coincided with the release of six US detainees and the recommencement of deportation flights. Following this, 166 Venezuelan migrants have returned from the US, the latest arriving in Caracas on February 20. Maduro, however, has minimized the repercussions of Chevron’s departure, asserting that production would remain unaffected.
In conclusion, the potential revocation of operational waivers poses a significant threat to the Venezuelan economy, particularly impacting oil production, which is crucial for its recovery. The Trump administration’s approach continues to evolve, and while pressure mounts on Maduro, his administration attempts to downplay the ramifications of the impending company withdrawals. With foreign companies in suspense, the combination of sanctions and changing political dynamics may further shape Venezuela’s economic landscape.
Original Source: www.business-standard.com
