The U.S. Orders Chevron to Cease Venezuela Operations Amid Sanctions

The U.S.-headquartered energy giant Chevron has been given a 30-day deadline to bring a wind-down of its crude oil production and exports in Venezuela to an end, as its previous license has been revoked by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).

Venezuela’s individuals and entities have been on the U.S. sanctions list since 2005 thanks to not only executive but also congressional action. After the previous Trump administration blocked all Venezuelan government property in the United States in 2019, the sanctions were interpreted to place Venezuela in the same boat as North Korea, Iran, or Cuba.

While the enlarged sanctions package entailed financial and sectoral sanctions, alongside sanctions on the Maduro government, in response to what was described as “increasing repression and corruption” under President Nicolás Maduro, who has been in power since 2013, it still allowed oil and gas players such as Chevron, Halliburton, SLB, Baker Hughes, and Weatherford to continue doing business with Petróleos de Venezuela, S.A. (PDVSA), Venezuela’s state-owned oil company.

A six-month grace period, granted by the Biden administration, offered limited sanctions relief from October 2023 after Maduro and the opposition resumed negotiations, enabling companies to engage in Venezuela’s oil and gas sector as a way to incentivize the Maduro government to comply with an electoral roadmap it had ironed out with the opposition.

Since the State Department underscored that Maduro officials had violated parts of the electoral roadmap, by barring the opposition primary winner, Maria Corina Machado, from running, the general license did not get renowned in April 2024. In September 2024, the Department of the Treasury imposed financial sanctions on 16 Maduro officials for their role in either electoral fraud or repression, with another 21 security and Cabinet officials joining the fray in November 2024.

Therefore, it does not come as a surprise that the Trump administration has now taken further steps to stop Chevron from pumping more Venezuelan crude, which served as the primary avenue for the U.S. oil major to get back the billions it poured into the country with a staggering amount of debt because of claims in international courts that surpass $60 billion.

This includes the recent decision from the International Centre for the Settlement of Investment Disputes (ICSID), which rejected Venezuela’s appeal, ordering the South American country to pay $8.7 billion to ConocoPhillips over the expropriation of three oil assets some 18 years ago.

As the U.S. has put an end to Chevron’s previous license from 2022, the company is likely to face an uphill battle in collecting the remaining billions of dollars. However, the U.S. oil major has a deadline to comply with the U.S. order until April 3, 2025, and wind down exports and other operations in Venezuela.

Delcy Rodriguez, Venezuela’s Vice President, claims that Maduro has ordered the activation of the ‘Absolute Productive Independence Plan,’ as a response to the sanctions imposed against Chevron to ensure that the hydrocarbon industry and the country’s economy continue their recovery in a stable and diversified manner.

Rodriguez emphasized: “The new U.S. government has succumbed to pressure from failed and defeated opposition sectors in Venezuela, by definitively sanctioning the U.S. company. Chevron has been operating oil fields in Venezuela for over a hundred years, and today, thanks to the Venezuelan extremist lobby, it has been removed from its operations in the country.

“The new U.S. government, intending to harm the Venezuelan people, is inflicting harm on itself by causing an increase in the price of fuel and affecting the legal security of its companies’ investments abroad, calling into question the supposed and deceptive economic freedom. Neither in the past nor now will the same failed and defeated opponents be able to harm our country. A great national awareness and unity will continue to mark the path to economic recovery with social justice.”

OPEC+ Output Ramp-Up Upholds Oil Markets’ Stability

Since the U.S. decision to pull the plug on Chevron’s oil exports from Venezuela in a month coincides with OPEC+ oil cartel’s decision to proceed with a gradual and flexible return of the 2.2 million barrels per day voluntary adjustments starting from April 2025, no immediate instability is noted in oil markets.

The decision came from eight OPEC+ countries – Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman – which previously announced additional voluntary adjustments in April and November 2023 to support oil market stability. However, the drop in Venezuela’s gross domestic product (GDP) data reflects the bite of U.S. sanctions and low oil prices, among other things.

Effective from March 4, 2025, General License No. 41, dated November 26, 2022, has been replaced and superseded in its entirety by General License No. 41A, which does not authorize the payment of any taxes or royalties to the government of Venezuela; the payment of any dividends, including a dividend in kind, to PDVSA, or any entity in which the NOC owns, directly or indirectly, a 50% or greater interest; and the sale of petroleum or petroleum products produced by or through the Chevron JVs for the exportation to any jurisdiction other than the United States.

In addition, it does not allow any transaction involving an entity located in Venezuela that is owned or controlled by an entity in the Russian Federation; or any transactions otherwise prohibited by the VSR, including transactions involving any person blocked under it.

Therefore, the revoked license is expected to deliver another blow to the South American country, as it covers transactions previously authorized by Venezuela General License 41 related to the operation and management by Chevron or its subsidiaries involving PDVSA or any entity in which this firm owns, directly or indirectly, a 50% or greater interest.

Chevron established a presence in Venezuela with exploration activities in 1923, and the discovery of the Boscan field in 1946. The U.S. player has its fingers in five onshore and offshore production projects in western and eastern parts of the South American country through partnership with affiliates of PDVSA. The company has stakes in four non-operated joint-venture operations in partnership with Venezuela’s NOC and three projects with a focus on heavy or extra-heavy crude oil.

Mike Wirth, Chevron’s Chairman and CEO, discussed changing views toward oil and gas, as well as the company’s new ventures that aim to meet the energy needs of big tech companies during a recent appearance on Bloomberg Surveillance, pointing out the new, pragmatic approach to energy under the new administration in the White House, as attitudes toward energy are shifting.