[Asia Economy Reporter Hyunwoo Lee] The U.S. government has reportedly allowed Italian and Spanish companies to receive Venezuelan crude oil in lieu of debt as a measure to reduce Europe's dependence on Russian energy.
According to foreign media including CNN on the 5th (local time), the U.S. Department of State has authorized energy companies Italy's Eni and Spain's Repsol to transport Venezuelan crude oil to Europe as early as next month. This is interpreted as a measure to partially ease the burden on the European market, which still has a high dependence on Russian oil.
Eni and Repsol had been receiving crude oil instead of cash after Venezuela's state-owned oil company PDVSA, their joint venture partner, failed to repay debts and pay dividends on time. However, this transaction had been suspended since 2020 when former U.S. President Donald Trump imposed sanctions on Venezuelan oil exports to pressure the Nicol?s Maduro regime.
The Biden administration's decision to allow the transaction again is analyzed to be for three main reasons: to reduce Europe's dependence on Russian crude oil, to decrease Venezuela's oil exports to China, and to provide a symbolic achievement to the Maduro regime to encourage dialogue with the Venezuelan opposition.
The U.S. government expects that the financial benefit PDVSA gains through this barter without receiving cash will not be significant. Since the volume of crude oil imported by Eni and Repsol is not large, the impact on international oil prices is also expected to be minimal.
However, transactions by other oil companies have not yet been authorized. U.S. Chevron, India's state-owned oil company ONGC, and France's Maurel&Prom have also requested the U.S. government to allow them to resume debt-for-oil exchanges with Venezuela, but they have not yet received approval.
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