By Bradley Olson and Ian Talley 

The Trump administration extended a license to let Chevron Corp. remain in Venezuela until late October, siding with officials who argued that the company's absence would put U.S. energy companies at a disadvantage and not significantly advance Washington's goal of ousting Venezuela's president.

The license allowing Chevron and several oil-field services companies to continue operating in the country was set to expire on Saturday, sparking considerable debate within the U.S. administration over whether to extend it, people familiar with the matter said.

Some U.S. officials see a Chevron departure as an essential step in the American-led effort to use economic pressure and isolation to force out Venezuelan President Nicolás Maduro. Others worry that Chevron's departure could lead to a greater role for Chinese and Russian operators in the country, and make it harder for American firms to regain a foothold in the future.

U.S. officials ultimately decided to let Chevron remain in Venezuela, where it has operated for nearly a century, until Oct. 25. Chevron's mandate, which had already been extended six months earlier this year, could later be further extended.

Chevron pushed for license renewal, with spokesman Ray Fohr saying earlier this week that the company was hopeful it would be. "We are a constructive presence in the country," he said in a statement." Chevron on Friday said its Venezuela operations "continue in compliance with all applicable laws and regulations."

Chevron operates a number of projects jointly with Venezuela's state oil company, Petróleos de Venezuela SA, or Pemex, that have managed to maintain production levels even as output has fallen in other areas. For years, the joint operations with Chevron and other companies have been a critical cash lifeline for the country.

Chevron's share of production from Venezuela was 44,000 barrels of oil and gas a day last year, less than 2% of its global output total.

U.S. sanctions have had a punishing effect on Venezuela's oil industry, with production falling by almost half since January to an estimated 690,000 barrels a day, according to the U.S. Energy Information Administration.

Venezuela is in the throes of a humanitarian crisis driven by poor economic management, corruption and U.S. sanctions that have all led to precipitous economic decline and runaway inflation. Violence and shortages of food and medicine have prompted a mass exodus to other countries.

The U.S. Treasury Department didn't immediately respond Friday to questions on why it chose a shorter timeline than the first license, or the optics of giving some U.S. companies access to Venezuelan oil while barring others.

But Secretary of State Mike Pompeo, when asked about the pending license decision Thursday, pointed to a key objective for the administration in the pressure campaign.

"We're trying to ensure that there aren't wealth and resources that are getting into the pocket of Maduro and his cronies and flowing to the Cubans," he said.

Allowing Chevron and the four oilfield service companies including Halliburton Co. and Schlumberger Ltd. to remain in Venezuela also gives the U.S. a window into the state of oil production in the country, and thus, how much money the government still has coming into its coffers. That is critical to understanding the regime's potential staying-power, and is also a way to see whether revenue from Pemex are being diverted due to corruption, as former officials at the state oil company have previously alleged.

The office of Venezuela's U.S.-backed opposition leader, Juan Guaidó, vowed Monday to preserve Chevron's legal right to its assets in the event that the company is forced to exit from the country.

Clearview Energy Partners LLC said in a note to clients that it doesn't rule out further extensions. But the analysis firm added that the White House may be more willing to let the license lapse as the 2020 presidential election approaches, noting that conservative Cuban-American voters in Florida see pressuring Mr. Maduro as a way to antagonize Havana.

--Rebecca Elliott contributed to this article.

Write to Bradley Olson at Bradley.Olson@wsj.com and Ian Talley at ian.talley@wsj.com

 

(END) Dow Jones Newswires

July 26, 2019 15:14 ET (19:14 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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