Trump may leverage Chevron to advance Venezuela agenda

(Bloomberg) – One of the key reasons Venezuela’s economy is slowly recovering from the worst collapse in modern history is an oil giant 2,200 miles away: Chevron Corp.

The Houston-based oil major, which has a U.S. waiver to operate in Venezuela despite sanctions against Nicolás Maduro’s authoritarian regime, has helped lift the Andean nation’s crude production back above 1 million bpd, stoking an economy that lives and breathes oil.

Now Donald Trump is poised to leverage Chevron’s presence in Venezuela to get what he wants from Maduro.

The 2022 license that’s seen Chevron ramp up exports from Venezuela to a seven-year high is the most powerful tool the president has to advance his agenda in Caracas, which includes following through on his campaign pledge to halt irregular migration into the U.S. Cancelling the waiver would sever a vital financial lifeline for Venezuela’s economy as it begins to perk up — and generate more corruption by handing the government full control of oil trading again.

Chevron has been operating in Venezuela for more than a century. But the company has only recently begun to exert an outsized influence on the nation’s economy.

The revenue Chevron generates in dollars from rising oil production stays in the country and mostly gets reinvested in local currency through private banks, which can lend to companies that help boost the economy — all out of the clutches of the government. Some trickles down to consumers, helping fuel an incipient recovery that’s seen luxury stores, retail chains and car dealerships open in the capital even as a majority of Venezuelans remains impoverished.

Trump sent a top adviser to Caracas at the end of January, in a bold step to get to Maduro. The move resulted in the release of six American prisoners and the restart of deportation flights.

While it’s unclear if energy issues were discussed during special envoy Ric Grenell’s talks with Maduro, Chevron’s license was left untouched. It renewed automatically for six months the next day, as it does the first of every month.

“The license is a very challenging card to play,” David Goldwyn, head of the energy advisory group at the Atlantic Council, said by phone. “Chevron’s activity in Venezuela is in both country’s interests, as it’s having an efficient player helping the Venezuela economy from falling back and preventing migrants from coming back.”

Trump is keeping his options open. The U.S. company’s operations in the sanctioned nation are currently under review, the president told reporters on Feb. 18 at his Mar-a-Lago club in Florida. Asked whether he would be inclined to continue to allow oil exports through Chevron, Trump said: “Maybe not.” 

White House officials didn’t respond to emailed requests for comment on Friday.