Chevron has returned to Venezuela, but the move may prove problematic given the frictions in the US–Venezuela relations. What appears at first as an oil company regaining lost ground could be in fact another failed attempt to normalize oil production in Venezuela, marred by high-stakes political games.
The seesawing of US policy on Venezuela began in 2019, when Donald Trump’s first administration imposed sweeping sanctions on Venezuela’s state oil company PDVSA. The measures prohibited any US persons and companies from doing business with it, effectively shutting Venezuelan crude out of the US market. Imports halted entirely, and Caracas was forced to rely on opaque routes to Asia while its domestic infrastructure was steadily collapsing.
Nearly 4 years later, under President Joe Biden, a narrow opening appeared. In 2022, the Treasury allowed Chevron to restart work in its Venezuelan joint ventures – Petroboscán (where it owns about 40 %), Petroindependiente (25%), Petropiar (30%), and Petroindependencia (around 35%) alongside smaller partners. The waiver came with tight conditions: revenues could only be used to cover operating costs or repay billions of dollars in arrears that PDVSA owed Chevron, in the form of unpaid dividends, cost reimbursements, and loans for project development. No finances were allowed to reach PDVSA or the central government.
Even under those restrictions, Venezuela’s oil sector rebounded. Output climbed steadily from 715,000 b/d in 2022 to around 900,000 b/d in early 2025, while US imports of Venezuelan crude rose from some 75,000 b/d in January 2023 to nearly 300,000 b/d by December 2024. Chevron gained access to discounted heavy crude well suited to its refining system, and PDVSA benefited from foreign expertise and a legal export outlet that consolidated its operations. Moreover, the Venezuelan government started receiving Chevron’s equivalent of royalties in incremental production that it could send towards Asian markets, too.
That trajectory was broken with Trump’s return to the White House. In February 2025, his administration revoked Chevron’s license, ordered a 30-day wind-down period, and imposed a 25% tariff on all U.S. imports from countries that buy Venezuelan oil. With China taking 85 to 90% of Venezuela’s exports by mid-2025, the measure looked like another front in Washington’s economic confrontation with Beijing. In May, a narrow authorization was granted to Chevron to preserve assets and reduce seizure risks, but that did nothing for exports. Shipments to the US vanished entirely by June. Then, in late July, Treasury quietly issued a restricted license allowing Chevron to resume operations without making direct payments to PDVSA or the Venezuelan state. Details of the license were not disclosed, unlike earlier waivers. But tankers sailed almost immediately: in August, US imports of Venezuelan crude resumed at 84,000 b/d, according to Kpler data.
The context for Chevron’s return is more complex than it appears. During the company’s two-month absence in the summer, Venezuela’s crude production remained surprisingly steady. Official figures from Caracas put output at more than 1.1 million b/d in June and July, though the export and refining volumes suggest those numbers likely include condensate and natural gas liquids, inflating the totals. Even so, export flows tell a similar story: shipments held steady at around 700,000 b/d, revealing the country’s ability to sustain stable volumes despite Chevron’s temporary absence, mostly thanks to Chinese buyers. This suggests that the US company’s comeback in August should result in rising crude production and export numbers in the months to come.
The economics are clear. Production costs for Venezuela’s heavy crude remain well below current oil prices at around $30-35 per barrel, and Chevron’s refineries – particularly Pascagoula, Mississippi – are designed to process it. Little surprise then that the first cargoes after Trump’s July waiver headed straight from the José terminal to Pascagoula. There were rumours on the market suggesting Chevron might be reselling Venezuelan barrels to other US refiners, and data confirmed it: in August and September, most of the cargoes Chevron lifted ended up at Valero’s Port Charles and Port Arthur refineries.
The physical nature of Venezuelan crude adds another complication. Much of it is extremely heavy, often below 10 degrees API, and cannot flow without dilution. PDVSA blends it with lighter products such as naphtha to produce diluted crude oil grades like Hamaca DCO. Diluent imports, therefore, reflect prospective export potential. When exports to the US halted in June and July, naphtha inflows dropped to their lowest levels since late 2023. As Chevron’s operations resumed in August and September, naphtha imports surged again. The source of those imports has also shifted: before Trump’s full ban, most diluent came from the US, but now Russia has become the main supplier. This begs the question whether Chevron sees the Trump waiver as a temporary stopgap measure rather than a long-term solution, remaining wary to supply its own naphtha as it did before 2025.
For Venezuela, Chevron’s role is indispensable. Every license renewal since 2019 must have caused many sleepless nights in Caracas: the US major’s operations have underpinned Venezuela’s fragile production recovery and provided a lifeline of incremental export volumes. Even the short suspension in June-July undermined PDVSA’s finances and highlighted its dependence on Chevron’s know-how to keep fields in the Orinoco Belt running. For Chevron, the seesawing of US foreign policy has been detrimental to the sustainability of its operations. Its sanctions waivers were rescinded on several occasions, from GL-41 to GL-41A to GL-41B, with little notice, and could be revoked again.
Trump has sharpened Washington’s posture, linking sanctions on Venezuela to drugs, crime, and migration. In September 2025, the administration declared Venezuela a major drug-transit country that had ‘failed demonstrably’ to meet its obligations. The announcement came days after US forces struck two Venezuelan vessels accused of drug trafficking, strikes that president Nicolás Maduro denounced as ‘aggressions’.
Amidst plunging Mexican crude exports to the US, the Trump administration ought to weigh the pros and cons of depriving the US Gulf Coast of much-needed heavy barrels. Therefore, it is most likely that Chevron will maintain its restricted license all the way through the remaining months of 2025, shipping part of its Venezuelan equity volumes to Pascagoula and reselling some barrels to Valero. But the downside is clear: a fresh political confrontation could push Washington to cancel the waiver, dropping US imports back to zero. At the end of the day, Trump’s second administration is actively showcasing that for them, economics is secondary – and the timetable is set by politics.
By Natalia Katona for Oilprice.com
