Chevron, Vitol, Trafigura vie to control Venezuelan oil exports, sources say

By Shariq Khan, Marianna Parraga and Dmitry Zhdannikov

NEW YORK/HOUSTON/LONDON, Jan 8 (Reuters) – Oil major Chevron Corp, global trading houses Vitol and Trafigura, and other firms are competing for U.S. government deals to export crude oil from Venezuela, according to sources familiar with the matter.

The competition reflects a desire by many in the oil industry to access the South American country’s crude stocks and production, with U.S. officials seeking to control Venezuelan oil sales indefinitely.

U.S. President Donald Trump has demanded that Venezuela give the United States full access to its oil sector just days after the U.S. captured the South American country’s President Nicolas Maduro on Saturday. U.S. officials have said Washington will control the country’s oil sales and revenues indefinitely.

Both Vitol and Trafigura were set to join Chevron and other major oil companies in meetings at the White House on Friday over the roles they may have in Venezuela’s oil industry, Reuters reported on Thursday.

Ahead of the meetings, the companies have been lobbying the U.S. government hard to secure a share of what are expected to be lucrative oil export agreements from Venezuela.

The companies are contesting initial deals to market the up to 50 million barrels of oil that state-run oil company PDVSA has accumulated in inventories amid a severe oil embargo that has involved four tanker seizures, two of the sources said.

This week, PDVSA said negotiations were progressing, but provided no details. Its main joint venture partner, Chevron, is well placed to negotiate an expansion of its license to operate in Venezuela as the only major oil company still in the country.

Chevron could also trade at least a portion of PDVSA’s own production, three sources said. However, for the first time in years, the U.S. oil major must compete with other foreign companies.

PDVSA wants to make sure that joint venture partners and former customers are part of the deal so it can complete debt repayment, expand output and secure fair prices for crude grades bound for specific destinations, two of the sources said.

On Wednesday, the U.S. Department of Energy said it was engaging with commodity marketers and banks to execute and provide financial support for Venezuelan crude and fuel sales. It did not specify which companies. 

Details about the competition for these contracts had not previously been reported.

The sources requested anonymity to discuss confidential information. Vitol and Trafigura declined to comment. Chevron, PDVSA, and the White House did not immediately reply to requests for comment.

TRADING HOUSES ENTER THE FRAY

Geneva-headquartered Vitol has already received a preliminary license from the U.S. government to begin negotiations for the import and export of oil from Venezuela for 18 months, four sources told Reuters on Thursday.

Vitol and Trafigura had traded Venezuelan oil prior to U.S. sanctions in 2019 and marketed cargoes initially received by some of PDVSA’s partners in recent years. Their capacity to have tanker fleets in Venezuela quickly and trade barrels exceeds that of others currently operating in Venezuela.

“U.S. majors are central to production, but large international trading houses bring global reach and optionality the majors lack. It therefore makes clear sense for these traders to engage proactively with the U.S. government to discuss next steps,” Jean-Francois Lambert of consultancy Lambert Commodities said.

US INDEFINITE CONTROL OF OIL SALES

The Trump administration set its sights on Venezuela’s oil industry soon after U.S. forces captured Maduro on January 3. Washington has said it wants to control Venezuela’s oil sales and revenue indefinitely.

Trump has said he wants U.S. companies to invest in Venezuela and rebuild its oil industry to produce more oil and bring global energy costs down. Some oil executives have begun arranging trips to Caracas to do initial assessments.

Analysts and industry executives have expressed skepticism, noting Venezuela’s degraded infrastructure, poor quality crude, and political uncertainty. U.S. oil majors have said they want “serious guarantees” before they make investments in Venezuela. 

Years of under-investment and sanctions have led Venezuela’s output to fall to around 1 million barrels per day, or just 1% of global supply, from 3.5 million bpd in the 1970s when it accounted for 7% of global oil.     

Since 2019, the only companies authorized by the U.S. to receive oil from Venezuela are Chevron, India’s Reliance , Italy’s Eni, Spain’s Repsol and France’s Maurel & Prom.

In recent years, China has taken the lion’s share of Venezuela’s oil exports through little known intermediaries. Since last month when the U.S. began a naval blockade of Venezuelan waters, China has been unable to import Venezuelan oil.

(Reporting by Shariq Khan in New York, Marianna Parraga and Arathy Somasekhar in Houston, Dmitry Zhdannikov in London, and Jarrett Renshaw in Washington DC; Editing by Richard Valdmanis and David Gregorio)