U.S. President Donald Trump has announced plans to visit Venezuela, marking the latest development in the U.S. effort to accelerate its access to the country's oil resources following the U.S. military's seizure of former President Maduro last month. Concurrently, the United States is restructuring the flow of funds from Venezuelan oil sales and significantly easing restrictions on global energy giants operating in the country.
In an interview with media at the White House, Trump confirmed his intention to visit Venezuela but did not provide specific dates or itinerary details. He claimed that the U.S. and Venezuela are working closely together, with major American oil companies extracting oil in Venezuela, and that Venezuela "will receive a significant portion of the proceeds."
This past Thursday, U.S. Energy Secretary Chris Wright stated in a media interview that revenue from Venezuelan oil sales has now surpassed $1 billion. He also revealed that the U.S. has established an account at the Treasury Department, and funds will no longer be routed through Qatar.
Previously, the Trump administration had deposited the initial $500 million in oil sale revenues into a U.S.-controlled account in Qatar. On Thursday, Democratic Senators Chuck Schumer and Adam Schiff proposed legislation demanding an independent audit of the Qatar account by the Government Accountability Office.
Wright explained that Qatar was initially chosen to circumvent the risk of Venezuelan creditors potentially freezing funds held in U.S. bank accounts. It is noteworthy that the unresolved issue of U.S. recognition of the Venezuelan government and complex sanctions waiver provisions continue to constrain a full recovery of the country's oil exports.
On Friday, the U.S. Treasury Department issued two general licenses, substantially easing sanctions on Venezuela's energy sector. However, Venezuela's state-owned oil company, PDVSA, is still only permitted to sell oil to companies granted individual licenses, which limits the pace of export expansion.
**Funds Rerouted to the United States**
Wright stated that the U.S. government previously established an account in Qatar to receive revenues from Venezuelan oil sales before transferring them back to Venezuela.
The fundamental reason for routing funds through Qatar was creditor risk. Venezuela faces tens of billions of dollars in outstanding debts due to sovereign debt defaults and the nationalization of assets belonging to companies like ExxonMobil and ConocoPhillips. Wright said:
"Venezuela has numerous creditors and owes substantial sums. If we had quickly set up a U.S. bank account to deposit the funds, creditors could have frozen that money. We want creditors to eventually be repaid, but these funds are urgently needed in Venezuela."
Reports indicate that U.S. Energy Secretary Chris Wright arrived in Caracas, Venezuela's capital, on the 11th, and is scheduled to meet with interim President Rodriguez and others. According to U.S. sources, Wright is the highest-ranking U.S. official to set foot in the South American country since the U.S. military intervention.
Wright stated that during his visit he would meet with interim President Rodriguez and oil and gas industry executives, and assess the status of Venezuela's oil and gas production.
He disclosed that the U.S. has signed a short-term agreement planning the sale of an additional $5 billion worth of Venezuelan crude oil in the coming months. This oil is already being sold to U.S. refineries and Europe.
**Legal Dilemma Created by Government Recognition Issue**
An additional complexity for the United States is its lack of formal recognition of the government led by Rodriguez. During his first term in 2019, Trump recognized the opposition-led National Assembly from 2015.
On January 28th, U.S. Secretary of State Marco Rubio told the Senate Foreign Relations Committee that the U.S. must find a solution to the government recognition issue before funds can be deposited in the United States. Rubio said:
"You have to recognize a government, but we do not recognize this government; we recognize the 2015 National Assembly, so we must find some creative legal pathway to meet that standard."
Reports citing international law expert Scott Anderson, a former State Department official, stated that based on Trump's recognition, Venezuelan oil revenues deposited in the U.S. would theoretically be under the control of the opposition National Assembly.
This raises questions about which government the U.S. will ultimately recognize and when.
Wright told NBC that Venezuela could hold elections and transition power during Trump's term, at which point U.S. oversight of Venezuelan domestic affairs would end. Wright said:
"This is a matter of process. Venezuela's long-term political leadership will ultimately be decided by Venezuela itself."
**Sanctions Easing Still Faces Implementation Hurdles**
On Friday, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) formally issued two new general licenses targeting five major U.S. oil giants, allowing Chevron, BP, Eni, Shell, and Repsol to resume oil and gas operations in Venezuela.
These companies still maintain offices in the country. The authorization requires that royalties and Venezuelan taxes be paid through a U.S.-controlled foreign government deposit fund.
Another license allows global companies to enter into contracts with PDVSA for new investments in Venezuelan oil and gas, but requires separate approval from OFAC. This authorization does not permit transactions with companies from Russia or Iran, or joint ventures controlled by individuals from those countries.
Although the U.S. issued a broad general license last month allowing oil exports and granted individual export licenses worth billions of dollars to traders Trafigura and Vitol, buyers of Venezuelan oil report that the general license has not sufficiently facilitated trade.
However, according to Reuters, citing four company sources seeking to purchase cargoes, PDVSA has refused over the past two weeks to sell oil to companies lacking individual U.S. licenses, limiting the speed of export growth.
Reports citing sources stated that the broad nature of the general license leaves many conditions open to interpretation, raising questions about what actions are permitted and which are prohibited.
PDVSA executives have requested specific guidance from the U.S. on which companies they can deal with, along with clearer transaction terms to track cargoes and ensure receipt of proceeds.
The reports also indicated that U.S. banks remain reluctant to finance Venezuelan oil trade transactions, citing the complexity of the licenses. One source was quoted as saying:
"Some banks may not want to take the risk of handling these transactions, or may believe these activities are not authorized... Banks are likely conducting more due diligence."
A Frequently Asked Questions document released by the U.S. Treasury last week stated that oil sales transactions must follow commercially reasonable terms, or terms "consistent with prevailing market and industry standards." The statement also said:
"Financial institutions may rely on a customer’s assertion that a transaction complies with the terms of General License 46, unless the institution knows or has reason to know it is not true."
The current general license for oil sales and trade does not allow for negotiated debt repayment using oil cargoes as previous authorizations did, posing a challenge for many PDVSA partners whose primary goal is recovering millions of dollars owed to them.
According to PDVSA's updated export schedule this week, Vitol, Trafigura, and Chevron continue to account for the majority of Venezuelan oil exports, despite the state-owned company holding numerous meetings with various entities, including U.S. and other refineries, to negotiate direct purchases.
Shipping data shows Venezuela's oil exports rose to approximately 800,000 barrels per day in January from 498,000 bpd in December, but remain below last year's average and are insufficient for large-scale inventory drawdowns.
Over the past two months, U.S. Gulf Coast refineries have struggled to absorb the rapid surge in shipments of Venezuelan crude, leading traders to potentially resell Venezuelan oil to Europe and Asia.