Italian oil company Eni SpA and Spain's Repsol SA could begin shipping Venezuelan oil to Europe as soon as next month to make up for Russian crude, Reuters reported on Sunday, resuming oil-for-debt swaps halted two years ago when Washington stepped up sanctions on Venezuela. The U.S. State Department gave the nod to the two companies to resume shipments in a letter, Reuters said. U.S. President Joe Biden's administration hopes the Venezuelan crude can help Europe cut dependence on Russia and re-direct some of Venezuela's cargoes from China. Coaxing Maduro into restarting political talks with Venezuela's opposition is another aim. The two European energy companies, which have joint ventures with Venezuelan state-run oil company PDVSA, can count the crude cargoes toward unpaid debts and late dividends.
This news comes after the Biden administration seemed to signal a possible softening of its sanctions position on Caracas considering the U.S. ban on Russian oil imports that President Biden signed into law on 11 April 2022, potentially allowing Chevron to start selling Venezuela heavy crude again to U.S. refineries. The deal would be subject to improvements in the talks between the government and the opposition which are due to resume shortly. Last month the Biden administration authorized Chevron to negotiate directly with PDVSA about future operations in Venezuela. Chevron would forgive unpaid debt by PDVSA in exchange for more control in the joint ventures with the Venezuelan state owned company and increase production to export crude oil towards the U.S. continent to replace part of the Russian output.
In this sense, last week, Economist Victor Álvarez pointed out that if the European and U.S. oil companies return to Venezuela, PDVSA's income could increase to $25bn and production to 1.2 million barrels of crude oil per day. However, if the sanctions scenario does not change, “Venezuela will have to continue offering great discounts and paying expensive freight to sell its oil. The Oil Chamber has calculated the losses at $18m a day and the firm Ecoanalítica calculates them at $4bn a year”, the expert highlighted in his publication Pedagogía Económica.
Although it’s unclear if similar deals could be available to other creditors, if major oil companies were to return to Venezuela this could turn around the Venezuelan economy and give creditors strong recovery prospects.
Despite the signals of potential easing of the sanctions sent by the Biden administration, it has made a final decision against inviting the governments of Cuba, Venezuela and Nicaragua to a regional summit this week, bucking calls from Mexico’s president to include all countries or risk him staying home. Both Guaido and Maduro haven't been invited to the summit even though the U.S. recognise Juan Guaido as the legitimate president of Venezuela. | 
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