In the midst of Venezuela’s most dramatic political transformation, the return of foreign oil companies to the South American country is gradually beginning to allay doubts from international investors.
On Wednesday, the U.S. Treasury Department ordered that major multinational oil companies must pay local state taxes and fees to the Venezuelan government, as part of a massive effort to turn around the nation’s dilapidated oil sector.
Under the new arrangement, royalties and federal taxes are to be deposited in the U.S. government fund, charged with overseeing revenues from Venezuelan oil production.
Earlier this month, the Treasury Department under Scott Bessent issued licenses approving the resumption of oil and gas activities in Venezuela to five major multinational companies.
The licensing will allow Chevron, BP, Italy’s Eni Spa, Shell, and Repsol to re-enter Venezuela and resume operations in the country.
In 1976, President Carlos Andrés Pérez nationalized the nation’s oil industry with the creation of the state-owned P.D.V.S.A. (Petróleos de Venezuela, S.A.).
Under Hugo Chávez, the regime further tightened state control of the sector to use the revenues to redistribute vast amounts of wealth to the population, and to subsidize domestic goods like grains, telecommunication services, and fuel for residents, resulting in collapsing domestic industries, uncontrolled inflation, and crumbling currency valuations.
IMF’s Assessment of a “Quite Fragile” Situation
On Thursday, IMF spokeswoman Julie Kozack told reporters that the international body was closely monitoring the situation in Venezuela, noting that the economic situation in the country following the capture of Nicolás Maduro was “quite fragile,” according to reports from Reuters.
The IMF had officially paused relations with the South American pariah state in 2019.
“Venezuela is undergoing a severe and prolonged economic and humanitarian crisis,” Kozack said, adding, “Socioeconomic conditions remain very difficult; poverty is high, inequality is high and there's widespread shortages of basic services.”
The spokeswoman also stated that the body is actively listening to partners in the international community on whether to resume relations with the interim government of Delcy Rodríguez.
