Leak: Biden Administration to grant Chevron license to pump oil in Venezuela, where dirty oil is name of the game

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Venezuela oil industry concept, industrial illustration. Venezuela flag and oil wells and the red and blue sunset or sunrise sky background - 3D illustration

The Biden Administration is preparing to give Chevron a license to pump oil again in Venezuela, news organizations reported on Wednesday, in what appears to be a coordinated news leak.

The policy would lead to other oil companies restarting business with Venezuela in response to the tensions with Russia, and the U.S. and Europe embargo on Russian energy, including oil, gas, and coal.

If the permit goes forward, Chevron would regain partial control of its mothballed oil-production and other facilities in the underproducing Venezuelan oil fields, where it still maintains a stake along with partner Petróleos de Venezuela SA, the state-owned oil company, according to the Wall Street Journal. It wouldn’t make additional investments in Venezuela until certain debts are repaid, the newspaper reported.

PDVSA, the government-owned company, owns the majority stakes in Chevron’s four onshore joint ventures in the country. Under the Trump administration, the company and others were banned from drilling or transporting oil from Venezuela, as Trump cracked down on money going to the corrupt government of socialist President Nicholas Maduro.

“Granting the new license is contingent on the Venezuelan government and its political opponents’ announcement, expected Saturday, to implement a $3 billion humanitarian program using Venezuelan funds unfrozen by the U.S. as well as an agreement to resume talks in Mexico City next month on resolving the country’s political crisis through free and fair elections, people familiar with the matter said. The talks would quickly set in motion U.S. authorization for Chevron’s return to Venezuela’s oil fields,” according to the Journal report, which cited unnamed sources familiar with the plan.

Chevron was the last major US oil company operating in Venezuela. It applied for permits to begin pumping oil again in early summer, with most of the oil destined to head to Europe, where energy supplies are low.

“Between the 25th and 26th of November, the dialogue between the [Venezuelan] Maduro government and the Venezuelan opposition will restart,” Colombian President Gustavo Petro wrote Wednesday on Twitter.

Oil from Venezuela is not top quality. It’s considered to be dirty oil, unlike oil from Alaska’s North Slope, where strong environmental standards are rigorous. Earlier this year, the Biden Administration cancelled drilling sales in Alaska and the Gulf of Mexico, saying there was a lack of interest among bidders. Instead, the administration is looking to socialist countries offering dirty oil.

The oil from Venezuela is In 2017, Reuters wrote that Venezuela’s state-run oil company was increasingly delivering poor quality crude oil to major refiners in the United States, India and China, resulting in repeated complaints, canceled orders and demands for discounts.

The disputes involved oil that was contaminated with high levels of salt, water, and metals, all of which cause refineries problems, Reuters wrote.

Quality issues stem from “shortages of chemicals and equipment to properly treat and store the oil, resulting in shutdowns and slowdowns at PDVSA production facilities, along with hurried transporting to avoid late deliveries, the sources said,” Reuters reported.

U.S. refiner Phillips 66 canceled at least eight crude cargoes because of poor oil quality in the first half of 2017 and demanded discounts on other deliveries, according to the PDVSA documents and employees from both firms. The canceled shipments – amounting to 4.4 million barrels of oil – had a market value of nearly $200 million, Reuters reported.

“Another key buyer of Venezuelan crude – India’s Reliance Industries Ltd RELI.NS, operator of the world’s largest refinery – has repeatedly complained about oil quality, a PDVSA employee told Reuters. State-run firm China National Petroleum Corp (CNPC) also complained earlier this year about excessive water levels in oil cargoes, a former PDVSA employee said,” Reuters wrote.

It’s not just the Venezuelan oil that is dirty. Oil spills in Venezuela between 2020 and 2021 have caused serious damage to the environment, according to the Venezuelan Academy of Physical, Mathematical and Natural Sciences. Some 26,730 barrels of oil spilled on the the northwest coast, polluting the national park Morrocoy.

19 COMMENTS

  1. I think that MRAK is skating right up to the edge of what it is qualified to report on. Having worked Internationally for oil majors in both developed and underdeveloped locations, I can say that the situation is not quite as simple as you make it out to be. In many such arrangements where Western companies are involved, they are hired as contractors and therefore don’t have complete control. In other cases, they have a minority stake, and therefore don’t have full control of budgets, procurement, and operating practices. In these cases, companies make a best effort to bring the often dismal standards up to a decent Western standard, or as close as it can be given the constraints. Having worked in Algeria, Iraq, Indonesia, Azerbaijan, and other regions where the State oil company has starved the business of cash, the facilities can be in a state of complete disrepair, having huge implications for safety, production quality, and the environment. Again, in these cases, the Western companies strive to improve the situation, but bringing it up to best practices is often impossible, given the constraints of time, money, and politics. Rest assured, however, that when Western oil majors operate in such situations, they work, as much as possible, to improve the equipment, the safety practices, and the environmental performance of the operation. To those who work in the “Cinderella” oilfields of the North Slope, you have never seem the industry as it exists in much/most of the world, and if you did, you would be shocked. I know I was, and we left it much better than we found it. And please don’t try to cast Biden as a hypocrite for his actions. This is a pragmatic solution to a problem, and any President would have made the same choice under similar circumstances.

    • Biden is a hypocrite and the problem is largely self inflicted and by Biden. This is nothing more than a way for him to save face after having said a bunch of stupid stuff previously about “no new oil” or whatever similar drivel spilled out of his pie hole last time it opened.

      The trick is to get Alaskans working.

      The stateside economy is going gangbusters and Alaska is not. For 8 years now Alaska has experienced negative population growth and it is that we are a one trick pony and our pony is going unloved.

    • Any President of the United States of America that was worth his/her salt and who cared anything about the environment would rather employ Americans in America under the “Cinderella” conditions we have here than in a corrupt socialist third world country with virtually no environmental regulations. This is a clearly hypocritical decision with no pragmatic solution in mind. With your experience and understanding I find it hard to believe that your partisanship outweighs the plainly obvious.

    • Nope not even close. You’re covering for democrats again. You continually let your political ideology circumvent your purported knowledge. President Trump would not have put in this position. Biden did. Your copium is an addiction that’s clouding your judgment. Nice try, dog.

  2. So we can’t pump oil here in the States, where we can control quality and safety, but it’s ok to pump oil from a communist country with no regard for safety or it’s citizens well being. How much is the Biden criminal enterprise being paid for this deal?

  3. Oil produced in the US causes climate change. Oil produced in other parts of the world (even neighbors just to the south) don’t cause climate change. I’ve always scratched my head over this. Then, we have Lisa Murkowski taking her Uncle Joe’s money and paying Alaskans not to work.

  4. I have it on good authority from several chemists, and a whole lot of petroleum engineers that it is only US petroleum that emits greenhouse gasses. Oil obtained from other countries is 100% green energy.

  5. Venzuela has low labor and management standards because they don’t read, they didn’t read to their kids now grown. They definitely don’t read the bible. If they did they’d have learned better practices. You know all one has to do is ask God for wisdom, knowledge, understanding and God being a God of love for us- human race- he gives freely, recklessly, indiscriminately even for atheists. The same decline of standards happens to any nation who is not only ignorant of God’s Word but also book knowledge. So read to your kids.

  6. Actually, most third world oil producers do have well-written high-minded safety and environmental standards. The problem is that no one ever even thinks about them when making any exploration, production, or transportation decision. I once watched a third world country’s oil company continue to pump “oil” through its pipeline to a distant terminal even after they knew the line was leaking as much as a quarter of its throughput, because the shipping schedule was more important than any “stupid environmental” issue. After the ship sailed, they simply patched up the line, vacuumed up any oil that had pooled, and then trucked in thousands of loads of dirt to cover up the contaminated areas. And that was just the tip of the iceberg.
    In most of these countries, the multi-national oil company partners give a lot of lip service to these standards, but usually just look the other way when it becomes necessary.

  7. AMERICA First, MAGA! Alaska First, Make Alaska Great Again! How’s that for serving the needs of we the people in a pragmatic way.

    • The rhetoric you seem to mock actually led to policies that yielded low inflation, reduced red tape, increased employment in all segments of society, highest minority home ownership rates, peace deals in the mid-East via the Abraham Accords, elimination of ISIS, greatly reduced the scope of the tragedy along our southern border, returned billions or trillions in capital from foreign shores through tax reduction, etc. etc. etc. My apologies if I mis-understood your comment.

  8. It’s just another one of Biden’s “HATE AMERICA” propaganda. He goes to our enemies and makes contracts, he wants to starve our American economy and destroy our hard working people.

  9. Oil from anywhere but Canada and the not so United States is good. According to the Brandon administration, Oil from those other countries does not pollute the world when it is being used to fuel our modern lives.

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