July 23, 2019 / 8:36 PM / a month ago

Trump administration split on renewing Chevron's Venezuela license

WASHINGTON (Reuters) - The Trump administration is split over whether to renew a license this week for energy company Chevron Corp’s operations in Venezuela, with Secretary of State Mike Pompeo supporting a renewal and others opposing it, three sources with knowledge of the matter said on Tuesday.

FILE PHOTO: The logo of Chevron is seen at the company's office in Caracas, Venezuela April 25, 2018. REUTERS/Marco Bello

At issue is a six-month U.S. Treasury Department license that expires on July 27 that has allowed Chevron to keep operating its four joint ventures in Venezuela despite U.S. sanctions on the OPEC nation’s oil sector.

Washington imposed sanctions on Venezuela’s state oil company PDVSA [PDVSA.UL] in January as part of an effort to slash cash flow to socialist President Nicolas Maduro and pressure him to step down. Venezuela’s economy is on the brink of collapse.

Pompeo, who was once the president of oilfield services company Sentry International, understands that having an American beachhead in Venezuela would help speed an economic recovery if Maduro’s government falls, said the sources, who spoke on condition of anonymity.

White House economic adviser Larry Kudlow also favors renewing the license, the sources said.

John Bolton, Trump’s national security adviser, opposes renewal as part of keeping maximum pressure on Maduro, the sources said. If Chevron is forced to leave, it could further crimp cash flow to Maduro’s government, as oil production could dip.

“Those in the administration who have looked at the enormous task of bringing Venezuela back from the abyss realize that the revival of the oil industry, the main source of foreign earnings, is a difficult multiyear process,” one of the sources said of Pompeo’s view.

“Maintaining an American lever will be very helpful on Day One,” said the source, who has spoken with Trump Cabinet members about reviving the economy after Maduro.

Amid the split, the easiest thing for the administration to do would be to renew the license for up to three months, rather than the original six, two of the sources said.

The State Department and the White House’s National Security Council did not immediately respond to requests for comment.

Chevron, which has been in Venezuela for nearly 100 years, produces the equivalent of about 40,000 barrels per day of oil and natural gas there. It declined to comment about the license, saying it is focused on employees’ safety and on conducting business in full compliance with all applicable laws and regulations.

If Chevron leaves, its assets would likely end up in the hands of Russian oil giant Rosneft, which would be counter to U.S. foreign policy goals, the sources said.

“If they pull the plug on Chevron, it’s just a gift on a big platter to the Russians,” one said. The assets could also wind up in the hands of PDVSA or Chinese oil companies.

Opposition leader Juan Guaido, the head of the National Assembly, said on Tuesday he would seek to protect Chevron’s assets in the country if Washington does not renew the license.

A source in Venezuela expected the license to be extended for either three or six months, with an announcement on Friday or Monday.

Reporting by Timothy Gardner in Washington; additional reporting by Luc Cohen in Caracas; editing by Jonathan Oatis

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