The Biden administration granted Chevron Corp. a license to resume oil production in Venezuela after US sanctions halted all drilling activities almost three years ago.
More oil on the market is bad for exporters like Nigeria as oil prices have fallen in recent weeks on demand concerns.
Federal officials granted the license after Venezuelan President Nicolas Maduro—who has been harshly criticized for human rights abuses—agreed with opposition party members to a humanitarian spending plan focused on education, public health, food security and electricity programs, and to continue negotiating around efforts to hold free and fair elections in 2024.
The Biden Administration called the announcement an “important step in the right direction,” CNN reported—as the Latin American country remains in a political stalemate over who its leader is, with several countries, including the U.S., recognizing opposition party member Juan Guaido as its president after an allegedly fraudulent 2020 election.
The license comes with several limitations, however, including a provision prohibiting Chevron from conducting any transactions with Iran or Russian owned-entities in Venezuela, Bloomberg reported.
It also prohibits the country’s oil company, Petroleos de Venezuela, S.A.—which the U.S. sanctioned in 2019—from receiving profits from Chevron’s oil sales, which are intended to go instead to repaying debt owed to Chevron, according to the White House official.
In a statement, federal officials said the measure is aimed at “targeted sanctions relief” for “concrete steps that alleviate the suffering of the Venezuelan people and support the restoration of democracy,” adding the Treasury Department will “continue to hold accountable any actor that engages in corruption, violates U.S. laws or abuses human rights” in Venezuela, which is home to the largest oil reserves in the world.
The Treasury Department maintains the right to revoke the agreement at any time if Venezuela does not follow through on its end of the negotiations.