The PDVSA state would receive new income from oil production through the mixed companies that will stop operating with Chevron, according to market sources. Production would progressively fall, they warn consulted specialists.
The suspension of oil licenses in Venezuela by the United States will allow the Government of Nicolás Maduro to control 100 % of these operations and receive in the short term income before the payment of debts to foreign signatures, but it will be difficult to maintain the current level of production, according to experts and market sources.
Petrolero Market sources stated that PDVSA will now control 100 % of operations in mixed companies where it shares shares with Chevron, which produces an average of just over 200,000 barrels of crude oil per day, immediately after the license suspension is completed.
“In principle, PDVSA is going to sell 100 % of crude oil in those mixed companies,” although it would have to sell it with a discount between 25 and 30 % of its regular price given the entry into force of a context of sanctions to that crude, according to a source with knowledge of the topic that spoke with the Voice of America under condition of anonymity for fear of reprisals. The price of crude rounds between 68 and 74 dollars.
The US President Donald Trump announced on February 26 that he decided to reverse the oil concessions given in November 2022 by the previous administration, of the Democrat Joe Biden, which allowed the American firm Chevron to import Venezuelan oil for payment of debts. That change It was completed on Tuesday with General license 41awhich demands the closure of Chevron operations in 30 days.
According to Trump, the Maduro government breached the electoral agreements with its opponents that these concessions intended to encourage and did not processed the agreed deportation flights of irregular immigrants, whom he described as “violent criminals.”
Although Trump said that the suspension of that license would be completed on March 1, there was no official notification of the United States government and was automatically renewed, as every first day of the month, but everything changed on Tuesday.
In response, the Venezuelan ruler Nicolás Maduro insisted on proposing “a dialogue respectful of equal” between Caracas and Washington.
After knowing the 41A license, the Vice President of the Government of Maduro and Minister of Hydrocarbons, Delcy Rodríguez, said that the South American country activated an “absolute productive independence plan” to deal with US sanctions.
“The new US government has succumbed to the pressure of failed and defeated opposition sectors of Venezuela,” he valued Tuesday afternoon, considering that the measure will cause the increase in fuel prices in the North American country.
Debt and contractor problems
According to the sources consulted, the new 41A license will cause difficulties to PDVSA to retain quality and experience contractors operated by mixed companies whose shares shared with Chevron -that production was exported to the US to collect old debts with the US firm.
“Chevron paid through an international subsidiary to the contractors to operate and, with the taking of those operations, they will not want to work,” said one of the sources, who said he hopes that the production “will fall progressively” in Venezuela.
The suspension of well drilling and maintenance programs would be another of the immediate logical consequences of the suspension of US concessions, they think.
A report by the firm Albus Data coincides with this forecast of the sources consulted by Voice of America. “While PDVSA could assume the production of short -term Chevron, progressive deterioration is expected at production levels from 2026,” said his report published after the decision, in February.
Other experts expect the other transnationals that operate in Venezuela thanks to licenses from the United States from the Biden era, such as the Spanish Repsol, the Italian EMI and the French Maurel & Prom, have the same destination and effect as the case of Chevron. The operating conditions of these companies were almost exact to General license 41, they explain.
Orlando Ochoa, economist and expert in the Venezuelan oil market, warned the Voa That it will be even more necessary “a financial sanitation” in both PDVSA and in the country's public administration, indistinctly from the destination of the concessions of the hydrocarbon sector.
In his opinion, PDVSA will have immediate problems to find contractors that allow him to operate the fields, due to his “chronic breach” in his payments to third parties.
“With or without sanctions, PDVSA and the Republic require financial sanitation. For accumulated debts, for chronic restructures and breaches, PDVSA cannot get contractors that comply with it, ”he said shortly before knowing the license 41a.
Ochoa insisted that there is “a background problem” in the Venezuelan oil industry that goes beyond restrictions from the United States. “It has to do with the prior financial management of Chavismo and the current government. Therefore, they have not been able to get new shareholders to operate. ”
Two years ago, the government arrested dozens of officials, including former vice president and former oil tareck el Aissamidue to a plot of corruption that fissured the industry for unofficially not specified millionaire amounts.
How far would production fall?
The elimination of oil licenses could cut between 200,000 and 300,000 barrels of daily crude production to production in Venezuela, according to estimates of the economist and researcher of the national market Rafael Quiroz Serrano.
The correction of General license 41 will affect the average production of 208,000 barrels per day in mixed companies where Chevron operates, he specified.
If the reversal of concessions in the United States also affects European transnational Voa.
Venezuela reported to the Organization of Petroleum Exporting Countries that produced 1.03 million barrels of crude oil per day, but secondary sources of the market encrypted that statistic in 892,000 barrels per day.
The suspension of the concession to Chevron would progressively lead Venezuelan production to a theoretical floor of 670,000 barrels, Quiroz Serrano estimated. In the case of European firms, it could be reduced to 565,000 barrels per day, he said.
In the worst scenario, Venezuelan oil production would not collapse to its lowest floor in this century, between July and August 2020, when it fell below the 400,000 barrels of crude oil a day during the contractions by the Covid-19 pandemic.
Zero royalties
Quiroz Serrano said that the suspension of oil concessions from the United States “does not harm the Venezuelan state”, which does not receive income from royalties or taxes from Chevron and European transnationals, remarks.
“The oil bill for production will cushion the debt that PDVSA has with Chevron. We cannot talk that the Venezuelan State will be affected in its income. It's a lie to say it, ”he said.
Also read: Crude goes up after Trump canceled Chevron's license in Venezuela
“Companies like Chevron do not pay in Venezuela or income tax or dividends. Those were the conditions that were established in license 41 and in the trade of the Federal Treasury of the United States, ”he warned.
Quiroz Serrano said that foreign signatures such as Chevron only “leave” in Venezuela the necessary amounts to pay payrolls and cover their operations in production and maintenance of oil fields, such as pieces and additives, among others.