July 23, 2019 / 4:01 PM / 2 months ago

Venezuela's Guaido pledges to protect Chevron assets if Trump does not renew license

CARACAS (Reuters) - Venezuelan opposition leader Juan Guaido said on Tuesday he would seek to protect Chevron Corp’s (CVX.N) assets in the country if the United States does not renew a license allowing the company to operate despite sanctions on the OPEC nation’s oil sector.

Lawmakers raise their hands as Venezuelan opposition leader Juan Guaido, who many nations have recognised as the country's rightful interim ruler, speaks during a session of Venezuela's National Assembly at a public square in Caracas, Venezuela July 23, 2019. REUTERS/Manaure Quintero

The Trump administration slapped sanctions on state oil company PDVSA in January as part of a bid to cut off cash flow to socialist President Nicolas Maduro and pressure him to leave power. A license allowing Chevron to keep operating its four joint ventures with PDVSA expires on July 27.

Guaido, the head of the opposition-controlled National Assembly, in January invoked the constitution to assume a rival presidency, arguing Maduro’s 2018 re-election was illegitimate.

In a decree published by his office, he said a possible decision not to extend the license “constitutes an event of force majeure” that could nonetheless “allow the illegitimate regime of Nicolas Maduro to take control of or expropriate the company’s assets.”

Once the sanctions are lifted, an event that presumably would not happen unless Maduro left power, “we will adopt all the measures that will allow Chevron Corporation and its affiliates in Venezuela to restart activities,” the decree said.

Guaido has been recognised as the rightful leader by most Western countries including the United States, but he would have no ability to enforce the decree while Maduro remains in power.

The move comes as industry observers have speculated that Maduro could transfer control of Chevron’s assets, which include the Petropiar joint venture and crude upgrader in the extra-heavy Orinoco oil belt, to state-owned companies from Russia or China, which have continued to recognise Maduro.

Neither PDVSA nor Venezuela’s oil or information ministries immediately responded to a request for comment. In a statement, Chevron declined to comment and said it was focused on ensuring its employees’ safety and “to conduct business in full compliance with all applicable laws and regulations.”

Venezuelan authorities have not commented directly on what they would do if Chevron’s license is not extended. But in April, Venezuelan Foreign Minister Jorge Arreaza praised Russia’s presence in the Orinoco belt and said that “companies that leave the oil belt will be substituted by companies of equal quality from Venezuela’s allies.”

Earlier this month, White House economic adviser Larry Kudlow said a possible renewal of the license was “under discussion.”

Chevron’s minority stakes in the Petropiar and Petroindependencia joint ventures in the Orinoco belt, as well as the Petroboscan and Petroindependiente joint ventures in western Venezuela, yielded net crude production of 44,000 barrels-per-day (bpd) for the company in 2018.

Venezuela produced 734,000 bpd in June, according to OPEC secondary sources, down from an average of 1.4 million bpd in 2018.

Reporting by Luc Cohen; Editing by Christian Plumb and Susan Thomas

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