U.S. Allows 2 Oil Companies To Ship Venezuelan Oil To Europe

Sources familiar with the subject said that Eni SpA in Italy and Repsol SA in Spain could start exporting Venezuelan oil to Europe as soon as next month to compensate for Russian crude, resuming oil-for-debt swaps that were halted two years ago when Washington tightened up sanctions on Venezuela, Marianna Parraga, and Matt Spetalnick reported for Reuters.

Photo Insert: A Repsol gas station in Belgium

The amount of oil Eni and Repsol are expecting to receive is not significant, and any impact on world oil prices would be minor. However, President Nicolas Maduro may benefit symbolically from Washington's approval of Venezuela's long-frozen oil exports to Europe.

The administration of US President Joe Biden thinks that Venezuelan crude will help Europe reduce its reliance on Russia and reroute some of Venezuela's supplies away from China. Another goal is to persuade Maduro to resume political discussions with Venezuela's opposition.

The petroleum cargoes can be counted against unpaid debts and late dividends by the two European energy corporations, which have joint ventures with Venezuelan state-run oil major PDVSA.

A key condition of this shipment was that the oil received "has to go to Europe. It cannot be resold elsewhere."

Washington believes that, unlike Venezuela's existing oil shipments to China, PDVSA will not profit financially from any cashless deals. Despite US pressure, China has refused to sign on to Western sanctions against Russia and continues to buy Russian oil and gas. The authorizations were issued last month, but no specifics or resale restrictions were disclosed.

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