The U.S. Treasury Department has handed Chevron a one-month window to cease its activities in Venezuela.
On Tuesday, the Treasury’s Office of Foreign Assets Control (OFAC) issued General License 41A (GL41A) establishing that the energy giant’s operations in its Venezuela joint ventures are only authorized through April 3.
The new document replaced General License 41 (GL41), which was issued by the Biden administration in November 2022 allowing Chevron to resume crude extraction and export processes in the Caribbean Nation. Under the new restrictions, the company is not even allowed to perform basic maintenance operations.
The Donald Trump administration announced its decision to force a shutdown of Chevron’s Venezuela activities on February 27. The White House argued that the Nicolás Maduro government did not fulfill electoral pledges and was not accepting migrant deportations fast enough.
The sanctions waiver withdrawal, alongside the highly shortened wind-down period, marks a significant escalation of Washington’s economic coercion against Venezuela. The moves contrast with Trump’s early engagement with Caracas which saw Special Envoy Richard Grenell hold a high-profile meeting with Maduro.
Axios reported that the revocation of Chevron’s license, a long-standing demand of foreign policy extremists and Venezuelan far-right politicians, was a result of pressure from Florida Republican House members ahead of a crucial U.S. Congress budget decision.
Representatives Mario Diaz-Balart, Carlos Gimenez and Maria Elvira Salazar produced key votes in the narrowly approved budget deal following the announcement of GL41’s removal. Nicknamed “Crazy Cubans” in reference to their roots, the three politicians heavily lobbied the administration to ramp up economic aggression against Caracas.
Though they also opposed the White House’s cancellation of Temporary Protected Status (TPS) for Venezuelan migrants, leaving some 600,000 at risk of deportation, Diaz-Balart, Gimenez and Salazar prioritized the hardening of sanctions over their constituents’ interests.
For its part, the Maduro government criticized the planned withdrawal of Chevron’s sanctions exemption as “damaging and inexplicable,” while vowing that the country’s economic recovery would continue.
On Tuesday afternoon, Caracas issued a statement accusing the U.S. government of “bowing to the pressure” of the Venezuelan opposition. Authorities went on to announce the activation of an “Absolute Productive Independence” plan to secure the stability of the energy sector.
GL41 was the Biden administration’s only major departure from the “maximum pressure” campaign imposed by Trump in his first term. OFAC issued General License 44 in October 2023, allowing Venezuela to freely export crude, but reimposed widespread restrictions six months later.
The South American country’s most important industry remains heavily burdened by coercive measures, including financial sanctions, an export embargo and secondary sanctions.
The U.S. Treasury Department likewise announced a review of authorizations granted to other foreign corporations to deal with Venezuela’s oil sector. European firms Repsol (Spain), Eni (Italy) and Maurel & Prom (France) all received Washington’s green light in recent years to ramp up operations in energy projects. Indian refining giant Reliance received permission to import Venezuelan crude.
Trinidad and Tobago’s state-owned National Gas Company also sought U.S. approval to pursue two natural gas projects in Venezuelan waters alongside BP and Shell, respectively.
Chevron holds minority stakes in four joint ventures that currently produce around 200,000 crude barrels per day (bpd), 20-25 percent of the country’s total output. According to Reuters, the company will abide by the Treasury’s directions to implement GL41.
The sudden removal of the firm’s sanctions waiver will have an immediate impact on Venezuela’s oil production. Washington’s sanctions ramp-up is likely to foster increased overcompliance as well, with international agents more inclined to avoid transactions with state oil company PDVSA. Venezuela has been forced to levy significant discounts and resort to unreliable intermediaries in order to export crude cargoes.
Analysts additionally predict that the fall in oil revenues will affect the Venezuelan government’s social spending ability and the supply of foreign currency, potentially triggering renewed inflation.
Edited by Cira Pascual Marquina in Caracas.