United States President Donald Trump on Wednesday announced plans to revoke oil concessions granted to Venezuela under his predecessor Joe Biden.
The decision is a major blow to the government of Nicolás Maduro, as the license provided crucial income through joint ventures between state-owned oil company PDVSA and U.S. oil and gas transnational Chevron.
In a post to social media on Wednesday, President Trump announced that he was “reversing the concessions that Crooked Joe Biden gave Nicolás Maduro, of Venezuela, on the oil transaction agreement, dated November 26, 2022.”
He said that the “electoral conditions within Venezuela” had “not been met by the Maduro regime,” referring to the July 2024 presidential election where Maduro claimed victory without providing any proof. Multiple independent electoral observers and Venezuela’s opposition party claimed their candidate, Edmundo González Urrutia, won the election.
Trump also cited that “the regime has not been transporting the violent criminals that they sent to our country” back to Venezuela at “the rapid pace they had agreed to.” In late January, special Trump envoy Richard Grennell met with President Maduro in Caracas with the objective of getting Venezuela to accept deportation flights of undocumented migrants.
While the terms of the revocation have not officially been published at the time of writing, the “concession agreement” established by the Biden administration, will be “terminated as of the March 1st option to renew,” as per the Trump statement.
Reacting to the decision, current Venezuelan Oil Minister and Vice President Delcy Rodríguez announced that, “The United States has made a harmful and inexplicable decision; by announcing sanctions against the U.S. company Chevron, pretending to harm the Venezuelan people.”
In a statement on her Telegram channel, Rodríguez added that the decision “is actually harming the United States, its population, and its companies, also calling into question the legal security of the U.S. in its international investment regime.”
Oil concessions made in 2022
In 2022, the Biden Administration granted Chevron a license to expand production in oil-rich Venezuela. This was an attempt to coax the Mauduro government to hold free and fair presidential elections in 2024.
Under General License 41, Chevron is authorized to operate joint ventures in the Latin American country, which had faced various sanctions in recent years. While General License 41 prohibits the payment of any taxes or royalties to the Government of Venezuela, a recent Bloomberg report appears to reveal that Chevron filed tax returns worth about USD $300 million to the Venezuelan government in 2024.
The license remained in place even after the Maduro allied National Electoral Council (CNE) declared Maduro the winner of the presidential election in July 2024, a result which has been challenged by the opposition and many countries, including the U.S.
Opposition leaders María Corina Machado and Edmundo González Urrutia, who is widely believed to have won the election, have called for the suspension of oil licenses to pressure the Maduro regime.
In late 2024, Venezuela’s oil exports reached a four-year high due to growing crude output and sales to India and the U.S.
According to commentary by the Centre for Strategic and International Studies (CSIS), licences allow Maduro to maintain an “important financial lifeline,” funded by Western oil companies.
Possible effects in Venezuela
Economist and director of Ecoanalítica, Asdrubal Oliveiros warned of possible repercussions that licence cancellation will have in Venezuela.
Speaking in a radio interview on Thursday, Oliveiros explained that while the oil licences did not resolve the structural economic issues Venezuela faces, their elimination will worsen the economic crisis.
Oliveiros highlighted that inflation would rise and the devaluation of the bolivar would worsen, impacting those most vulnerable in the country.
Venezuela is highly dependent on oil, as approximately 85% of income comes from its production. Yet, oil production will not fall immediately after March 1, as PDVSA can take control of oil production and sell crude to other countries, with higher discounts which will lower the flow of income, Oliveiros outlined.
Featured image credit:
Image: ‘La Perla’, en Venezuela/ “The pearl”, in Venezuela
Source: © Repsol YPF via Flickr
License: https://creativecommons.org/licenses/by-nc-sa/2.0/
