US to reimpose sanctions on Venezuela’s oil and gas sector

The United States will reimpose sanctions on Venezuela’s oil and gas sector in response to the Maduro government’s failure to allow “an inclusive and competitive election” to take place.

Last October, citing commitments made by President Nicolas Maduro to hold such an election in 2024, the US Treasury Department issued a temporary authorization to allow transactions with the country’s national oil and gas sector without fear of sanctions.

That authorization, formally known as General License 44, was due to expire on Thursday and the administration had to decide whether the Venezuelan government was upholding those commitments, which were made under the “Barbados Agreement” between representatives of Maduro and members of the political opposition in Venezuela.

According to a US senior administration official, the US “completed a very careful review” and determined that the Maduro government “has fallen short” in several key areas of the agreement.

As such, the US will not renew the general license and the sanctions that had been lifted will come back into force in 45 days.

“We were particularly concerned by the fact that the Venezuelan authorities also blocked the leading opposition candidate, Maria Corina Machado from running and then also did not allow her designated alternative candidate Dr. Corina Yoris to register as a candidate for president,” the official said Wednesday.

A second US senior administration official said the Maduro government “did not fully comply with the spirit or the letter of the Barbados Agreement.”

A third US senior administration official could not quantify the impact that revoking the authorization will have, noting that “there’s not a reporting requirements so we don’t have those exact figures” of how much business was done under that general license.

Notably, the US still will continue to allow another authorization from November 2022 to stand, which permits the oil company Chevron “to resume limited natural resource extraction operations in Venezuela.”

Since the Chevron license was issued, Venezuela has seen considerable production growth after years of economic collapse. This year, Venezuela’s economy is poised to grow the most among major South American economies, according to the latest economic outlook issued by the International Monetary Fund.

The second US official stressed that the decision to reinstate the sanctions “should not be viewed as a final decision that we no longer believe Venezuela can hold competitive and inclusive elections.”

“We’ll continue to engage with all stakeholders, including Maduro representatives, the democratic opposition, civil society, and the international community to support the Venezuelan people’s efforts to ensure a better future for Venezuela. The Barbados Agreement still represents the best available path for a more democratic, secure, and prosperous Venezuela, if fully implemented,” they said.

Asked if the decision took into account potential impacts on oil prices or unauthorized migration, the first official said they “really focused on the political circumstances and situation in Venezuela.”

“Of course, there was an interagency process that accompanies this that was able to bring in a wider array of interests and issues, which were of course part of the overall context of this of this decision. But fundamentally, the decision was based on the actions and non-actions of the Venezuelan authorities,” the official told reporters.

Millions of people have fled the country due to poor economic conditions, food shortages and limited access to health care.

Venezuela’s oil minister Pedro Tellechea told CNN on Wednesday the country is ready to bear the cost of reimposed sanctions from the United States.

“With these sanctions and the war in the Middle East, oil prices will spike and that will push to higher gas prices in the US. The damage [these sanctions cause] is not limited to Venezuela, but to the entire international community. Venezuela will keep growing with or without the sanctions,” Tellechea claimed.

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