A most difficult political situation in Venezuela has a direct impact on the United States and our ability to maintain our energy and national security. At issue, the world’s largest oil field, and whether or not the United States will maintain its access to such vast energy resources. The Trump administration made the right decision a month ago when it chose to extend for three more months waivers allowing several American energy companies permission to maintain their operations in Venezuela.
But what will happen in late October, when those extended waivers expire? If the Trump administration is smart, it will make the correct long-term play by extending the waivers indefinitely, allowing a vital partnership between the United Sates and Venezuela to continue.
Let’s back up a bit.
Venezuela – not the United States, or Saudi Arabia, or Iran, or Russia, or any other country – contains the world’s largest proven petroleum reserves, estimated at between 300 billion and 500 billion barrels.
And even though oil production has fallen significantly in Venezuela in recent years under the weight of the socialist government’s mismanagement and incompetence, those petroleum reserves still have a huge strategic value for any nation that has access to them. That’s why Russia and China are throwing billions of dollars at Venezuela right now – to prop up the Caracas regime in hopes they can earn favor, wait out the Trump administration, and eventually get their hands on those oil fields.
Following national elections in Venezuela last year that were widely seen by the international community as illegitimate, the U.S. and scores of other governments chose to no longer recognize Nicolás Maduro as the legitimate president of Venezuela. Instead, they chose to recognize Juan Guaidó, the President of the Venezuelan National Assembly, who was recognized by his fellow Assemblymen as the acting President of Venezuela on January 23 of this year.
Less than a week later, in an attempt to raise the pressure and force Maduro from power, the Trump administration imposed harsh economic sanctions against the regime. But even as it enacted sanctions, it specifically exempted several U.S.-based oil and oil services companies, giving them waivers for six months to allow them to continue to do business in Venezuela. Those waivers were set to expire in late July. But at the last minute, the Trump administration chose to extend the waivers for another 90 days, through late October.
So in roughly 60 days, the Trump administration will have to revisit the issue again. And, again, some inside the administration will argue that it’s time to end the waivers and fully impose the sanctions, thereby forcing America’s energy interests out of the troubled nation.
If that were to occur, the United States would Chevron would leave behind billions of dollars of energy producing equipment, infrastructure, and other assets. Those assets would likely be nationalized by the Maduro regime, and then sold or bartered to Russia or China in exchange for short-term infusions of hard currency so desperately needed by a corrupt government now dealing with 100,000-plus percent inflation. But without massive infusions of capital, those assets would deteriorate further, and make the task of rebuilding even more difficult in the future.
Instead, the Trump administration should make clear to all that it has no intention of forcing U.S.-based oil services companies to withdraw from Venezuela. Their continued presence will be a necessary part of international efforts to help rebuild the nation’s economy following the departure of Maduro and his cronies, and the reestablishment of a popular, democratically-elected government.
The U.S. energy industry has been involved in Venezuela for nearly a century – in fact, next year will mark the 100th anniversary of our energy alliance with Venezuela. Maintaining the our energy presence in Venezuela operations may not be the obvious play in the Trump administration’s efforts to remove the corrupt Maduro regime from power. But in the long run, it’s the smart play.
Jenny Beth Martin is honorary chairman of Tea Party Patriots Action.