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The United States is partially lifting sanctions on Venezuela following the resumption of talks between the South American country’s socialist government and a US-backed faction of the opposition.
The US Treasury Department on Wednesday evening issued a six-month licence authorising transactions in Venezuela’s oil and gas sectors, and a separate licence allowing dealings with national gold mining company Minerven.
The Treasury also amended two existing licenses to remove a ban on secondary trading of certain Venezuelan bonds and debt of Petróleos de Venezuela (PDVSA), the state oil company, though a ban on primary trading remains in effect.
The announcement of sanctions relief comes a day after the Maduro government and the Unitary Platform — a US-backed faction of the opposition — resumed political talks in Barbados. There, they agreed to hold a presidential election in the latter half of next year, but did not give a specific date.
“In response to these democratic developments, the US Department of the Treasury has issued general licenses authorising transactions involving Venezuela’s oil and gas sector and gold sector, as well as removing the ban on secondary trading,” the Treasury said in a statement.
The Venezuelan government and opposition also agreed to allow international observers into Venezuela for the election, including an EU delegation.
They also agreed that all qualified candidates may participate in the election, and that each side may choose its candidate according to its own rules. Jorge Rodríguez, the head of the government delegation, said on Tuesday that disqualified candidates would not be allowed to participate.
The opposition will hold its primary on Sunday, though frontrunner María Corina Machado was banned in June from holding office due to her support for US sanctions and the US-backed parallel presidency of Juan Guaidó in 2019.
“We believe that this road map is the most viable path for the people of Venezuela to secure a durable agreement that leads to competitive elections, the restoration of democratic order and an end to the humanitarian crisis in Venezuela,” a US official said on Wednesday.
The official added that the US “retains the authority to amend or revoke all authorisations should [Nicolás] Maduro and his representatives fail to follow through on their commitments”.
Maduro, who is widely expected to run in the election next year, assumed the presidency in 2013 following the death of Hugo Chávez, the father of the so-called Bolivarian Revolution, which promoted heavy public spending underwritten by the country’s oil wealth.
Venezuela boasts the world’s largest proven oil reserves and once pumped about 3mn barrels a day, though production today is well below 1mn b/d.
Corruption, US-led sanctions and a fall in oil prices led Venezuela to economic collapse, hyperinflation, food and medicine shortages, and the exodus of more than 7mn citizens. Meanwhile, Maduro tightened his grip on power, banning or jailing political opponents and cracking down on protests.
A relaxation of currency controls in recent years saw a stuttering economic recovery, though inflation still runs at triple digits and goods are often unaffordable to many of Venezuela’s 28mn people.
In 2019, the Trump administration placed strict sanctions on the country, as it sought to oust Maduro by recognising Guaidó’s presidency.
The Biden administration had been in talks with Maduro’s government for months, offering to relax sanctions in exchange for guarantees of a free and fair election in 2024.
Washington has been seeking ways to boost global oil supplies following Russia’s full-scale invasion of Ukraine last year, which sent energy prices higher.
It has drained almost 300mn barrels from the US strategic petroleum reserve and last year lifted some energy-related restrictions on Venezuela by granting Chevron a licence from the Treasury to resume limited oil production from its joint venture with PDVSA.
Most analysts said the easing of US sanctions would have a limited short-to-medium-term impact on Venezuelan production due to a decade-long collapse in capital investment caused by the country’s political and economic turmoil.
Rystad, a research group, said it expects Venezuelan production could increase by a maximum of 200,000 b/d of oil six months after sanctions are eased.
“The potential expansion is hindered by the prolonged lack of investment in the industry,” said Rystad, which estimates capital expenditure in Venezuela’s oil industry fell from an average of $12bn per year between 2010 and 2014 to $3bn in 2019. Capex has remained below $2bn for each of the past three years, it said.
Earlier on Wednesday, in another sign of detente between the two nations, the US deported its first group of Venezuelan migrants to an airport near Caracas, following a breakthrough after years of resistance from Maduro’s government.
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