Chevron continues operations in Venezuela despite war threat

The U.S. has stopped now a second tanker in the Caribbean. It had left Venezuela and is the latest move in President Trump's, quote, "complete blockade" of sanctioned oil tankers meant to force the country's president, Nicolas Maduro, out of power. There are tankers not subject to the blockade, ones operating for Chevron. The U.S. energy giant continues to operate in Venezuela and freely export its oil. Clayton Siegel is a senior fellow for energy security at the Center for Strategic and International Studies, and he joins us now from Houston. Welcome to the program.

CLAYTON SIEGEL: Thank you. Great to be here. RASCOE: How is Chevron able to operate in Venezuela?

SIEGEL: Well, Chevron, first of all, has been in Venezuela for substantially a hundred years. They have a very long track record of sticking with that market through thick and thin, but they decided a while back that Venezuela is a worthwhile market for them to stay vested in and to help the Venezuelan people access that resource. And so...

RASCOE: Well, this - it works for them, right? Like, I mean, they just not helping them out the goodness of their heart, right? They're making money off of this.

SIEGEL: For sure, but I think it's a two-way street. And I think that Chevron has a global portfolio of assets. They could easily exit Venezuela if they didn't really believe in the mission and the future in favor of places that have a lot greater political stability. But I think they see a long-term future in Venezuela and with the communities that they support there.

RASCOE: What is the scale of operations for Chevron in Venezuela?

SIEGEL: Well, Chevron is, I think, the largest single producer of oil and gas in Venezuela at this time. They apparently have what we call a specific license from the Department of Treasury to continue operations there, whereas a lot of other companies don't have that privilege. There used to be a general license that enabled a lot of companies to operate there. Those were revoked by the Trump administration during summertime. And again, those specific licenses aren't public, so we don't know the details. But we can surmise that Chevron does have one of those undisclosed specific licenses because we see in the numbers production from Chevron, and we see barrels flowing each week to the United States.

RASCOE: Republicans repeatedly criticized the Biden administration for allowing Chevron to export oil from Venezuela, arguing that it helped prop up the government of Nicolas Maduro. But the oil is still flowing under this administration. So what led to the change of heart?

SIEGEL: Well, I think that, first of all, this administration has had it with Maduro and is determined to replace it with the duly elected opposition. And so it seems like that's the direction of travel even before the president announced this blockade of sanctioned oil tankers. We are seeing a deterrent effect on those shadow tankers because quite a few of them that were on their way to Venezuela are staying away, and that can also have a deterrent effect on the other tankers that service the Venezuelan market, even the non-sanctioned tankers that take a lot of that oil all the way over to China. Most of Venezuela's oil actually winds up in China.

RASCOE: We should note that Chevron says its operations in Venezuela continue in full compliance with laws and regulations applicable to its business, as well as the sanctions frameworks provided by the U.S. government. What do you think will be the impact of President Trump's embargo on Venezuela and then globally?

SIEGEL: For Venezuela, the Maduro regime will not be able to hang on for very long if the embargo is enforced. And so that's the number one question to look out for is - was it just a declaration on Truth Social, or is there a real military policy that's going to result in a lot of those cargoes getting diverted? If yes, I think it will hasten Maduro's departure. Globally, that's exactly right. You should keep your eye on a tightening sanctions tanker market around the world. All those suppliers - Russia, Iran - that depend on this so-called shadow fleet are going to be paying close attention because costs are going to rise, risk is going to rise, and there is the possibility of this new tool being wielded more broadly around the world.

RASCOE: That's Clayton Siegel from the Center for Strategic and International Studies. Thank you so much for joining us.

RASCOE: And a note for full transparency - Chevron is a major corporate supporter of CSIS. But CSIS says the outcomes of its analysis are determined solely by its scholars.

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