The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued a new license Tuesday authorizing the export and sale of U.S. diluents to Venezuela. Diluents are a key fuel needed to produce exportable crude oil grades in the OPEC country.
The license is the second issued by the administration of President Donald Trump after the United States took control of Venezuela’s oil exports following the January 3 U.S. law enforcement operation in Caracas that led to the capture of socialist dictator Nicolás Maduro.
Tuesday’s license authorizes export and sale operations of U.S.-made diluent to Venezuela, a key supply for the production of exportable crude oil grades, and one particularly crucial for Venezuelan crude oil given its “extra heavy” nature.
The license’s terms explicitly state that said transactions of U.S.-origin diluent are authorized provided that their corresponding contracts with the Venezuelan regime, the state-owned oil company PDVSA, or any PDVSA entity specifies that U.S. laws govern the contract and that any dispute resolution under the contract occur in the United States.
The terms explicitly prohibit payment terms that are not “commercially reasonable” or involve debt swaps or payments in gold, digital currency, or tokens issued for, on on behalf of the Venezuelan regime, including the Petro — a largely-failed cryptocurrency pushed by Nicolás Maduro sanctioned by President Trump in 2018 during his first term. Transactions involving person located in or organized under the laws of Iran, North Korea, Cuba are explicitly banned.
OFAC’s new U.S.-made diluent for Venezuela’s oil industry comes days after the United States issued a license in late January granting U.S. oil companies expanded access to operate in Venezuela at a time when the nation’s socialist lawmakers passed a sweeping reform package to the nation’s hydrocarbon law, rescinding some of the strictest socialist restrictions to the nation’s oil industry. President Trump told reporters in January that U.S. companies will start drilling Venezuelan oil “very soon.”
Both Bloomberg and Reuters , citing unnamed sources familiar with the matter, reported on Tuesday that, as part of the Trump administration’s plans to rebuilt Venezuela’s oil industry, a new license is being prepared to allow companies to pump Venezuelan oil.
Similar to the January license, Thursday’s U.S. diluent authorization requires that any person that exports, reexports, sells, resells, or supplies U.S.-origin diluents to Venezuela as per the terms of the license must provide a detailed report to both the State and Energy Departments on the transactions, with subsequent reports every 90 days for a long as the transactions are ongoing.