The Trump administration on Thursday eased some sanctions on Venezuela's oil industry to encourage US investment, after US forces ousted the South American country's President Nicolas Maduro earlier this month.
The US Treasury authorized transactions involving the government of Venezuela and state oil company PDVSA related to "the lifting, exportation, reexportation, sale, resale, supply, storage, marketing, purchase, delivery, or transportation of Venezuelan-origin oil, including the refining of such oil, by an established US entity."
The authorization, known as a general license, did not include language lifting sanctions on production of Venezuelan oil. A White House official confirmed the measure kept sanctions on production of Venezuelan crude, adding it "would help flow existing product" and that there will soon be more announcements on easing of sanctions.
The move could unlock billions of dollars in new US investment into Venezuela's crippled energy sector, but it excludes firms from rivals like China and Russia, signaling an "America First" approach to the nation's reconstruction.
The easing of some sanctions marks a pronounced shift from the previous strategy of granting individual exemptions.
During US President Donald Trump's first administration, the Treasury's Office of Foreign Assets Control designated Venezuela's entire energy industry as subject to US sanctions in 2019 after Maduro's first re-election, which Washington did not recognize.
The license does not authorize any payment terms that are not commercially reasonable, involve debt swaps or payments in gold, or are denominated in digital currency.
The license excludes any transactions involving persons or entities located in or controlled by Russia, Iran, North Korea and Cuba. It also excludes transactions involving blocked vessels and entities "organized under the laws of Venezuela or the United States that is owned or controlled, directly or indirectly, by or in a joint venture with a person located in or organized under the laws of the People’s Republic of China."
Oil producers Chevron, Repsol, and ENI, refiner Reliance Industries, and some US oil service providers had sought licenses in recent weeks to expand output or exports from the OPEC member. The companies are partners and customers of PDVSA.
Jeremy Paner, a lawyer at Hughes Hubbard & Reed and a former OFAC sanctions investigator, said the authorization is broad in the sense that it opens up many operations including refining, transportation and "lifting" of Venezuelan oil.
But he said the scope is narrow in that it only applies to US companies.
Kevin Book, an analyst at ClearView Energy Partners, said the authorization could provide clarity for US companies considering new investments while maintaining the previous standard of case-by-case review for non-US entities.
“In short, it appears to offer ‘America First, Others Ask’ sanctions relief.”
The large number of individual requests to the US government had delayed progress on plans to expand exports and get investment moving quickly into Venezuela, two sources said this week.
The new OFAC license, meanwhile, came as lawmakers in Venezuela on Thursday approved a sweetened reform of the country's main oil law that is expected to grant autonomy to private producers in joint ventures or under new contracts to operate their projects and commercialize the output. It also formalizes an oil production-sharing model first introduced by Maduro and negotiated with little-known energy firms in recent years.
Following the US capture of Maduro, the Trump administration is pursuing a $100 billion reconstruction plan for the country's oil industry, and intends to manage the oil sales "indefinitely." The effort builds on an initial $2 billion deal that Washington and Caracas reached in January to export Venezuelan crude oil, including to US refiners.
Francisco Monaldi, director of the Latin American Energy Program at Rice University's Baker Institute in Houston, said he wondered if the exclusion of Russian and Chinese production would make it hard for PDVSA to operate or market oil from those ventures. Ventures with those countries produce about 22% of the oil, he said.
“If they cannot export the oil coming from these ventures, that's a big problem.”
American Airlines plans to resume US flights to Venezuela after Trump moves to open airspace
American Airlines said on Thursday it planned to resume services to Venezuela for the first time in more than six years pending government approval and subject to security assessments, just weeks after the US military seized the country's leader.
US President Donald Trump earlier on Thursday asked the Transportation Department to lift restrictions that currently bar US flights after a discussion with the country's acting President Delcy Rodríguez.
"American citizens will be very shortly able to go to Venezuela, and they'll be safe there," Trump said.
American suspended service to Venezuela in 2019 after the US barred flights.
United Airlines declined to say if it wanted to resume flights. Delta Air Lines did not immediately respond to a request for comment.
American, which started operating in Venezuela in 1987, said the planned daily flights will provide the opportunity for business, leisure and humanitarian travel to the region. It was the largest US airline in the country before the suspension of flights.
Flights are not likely to resume for weeks or a few months since the Federal Aviation Administration will need to conduct assessments and the Transportation Security Administration is also likely to conduct a security review.
"We look forward to facilitating the return of regular travel between the US and Venezuela," the FAA said on Thursday.
The Transportation Department will also need to rescind a 2019 order still in place that bars US flights that was issued in consultation with the Department of Homeland Security and the approval of the Secretary of State.
The State Department also added Venezuela to its "Do Not Travel" list for Americans in December.
On January 16, the FAA warned airlines to exercise caution when flying over Mexico, Central America and parts of South America, citing the risks of potential military activities and GPS interference.
The FAA on Thursday rescinded the caution notices for Mexico and Central American countries, as well as Ecuador, Colombia and portions of airspace within the eastern Pacific Ocean, saying they were no longer necessary.
Last month, a JetBlue passenger jet bound for New York took evasive action to avoid a mid-air collision with a US Air Force tanker plane near Venezuela that did not have its transponder activated.