• Trump says agreed volume to supply is 30-50 million barrels.
• Exports expected to stem further cuts to Venezuelan output.
• US interior secretary says US Gulf refiners would take advantage.
  

HOUSTON/WASHINGTON: Caracas and Washington have reached a deal to export up to $2 billion worth of Venezuelan crude to the United States, US President Donald Trump said on Tuesday, a flagship negotiation that would divert supplies from China while helping Venezuela avoid deeper oil production cuts.

The agreement is a strong sign that the Venezuelan government is responding to Trump’s demand that they open up to US oil companies or risk more military intervention. Trump has said he wants interim President Delcy Rodriguez to give the US and private companies “total access” to Venezuela’s oil industry.

Venezuela has millions of barrels of oil loaded on tankers and in storage tanks that it has been unable to ship due to a blockade on exports imposed by Trump since mid-December.

The blockade was part of rising US pressure on the government of Venezuelan President Nicolas Maduro that culminated in US forces capturing him this weekend. Top Venezuelan officials have called Maduro’s capture a kidnapping and accused the US of trying to steal the country’s vast oil reserves.

Venezuela will be “turning over” between 30 and 50 million barrels of “sanctioned oil” to the US, Trump said in a social media post.

“This Oil will be sold at its Market Price, and that money will be controlled by me, as President of the United States of America, to ensure it is used to benefit the people of Venezuela and the United States!,” he added.

US Energy Secretary Chris Wright is in charge of executing the deal, Trump said, adding that the oil will be taken from ships and sent directly to US ports.

Supplying the trapped crude to the US could initially require reallocating cargoes originally bound for China, two sources had told Reuters earlier on Tuesday. The Asian country has been Venezuela’s top buyer in the last decade, and especially since the United States imposed sanctions on companies involved in oil trade with Venezuela in 2020.

“Trump wants this to happen early so he can say it is a big win,” an oil industry source said.

Venezuelan government officials and PDVSA did not provide comment.

Chevron in control of Venezuelan oil flows to US

US crude prices fell more than 1.5% after Trump’s announcement, with the agreement expected to increase the volume of Venezuelan oil exported to the US.

That flow of oil is currently controlled entirely by Chevron, PDVSA’s main joint venture partner, under a US authorisation.

Chevron, which has been exporting between 100,000 and 150,000 barrels per day (bpd) of Venezuelan oil to the US, is the only company that has been loading and shipping crude without interruption from the South American country in recent weeks under the blockade.

It was not immediately clear if Venezuela would have any access to proceeds from the supply. Sanctions mean PDVSA is excluded from the global financial system, its bank accounts are frozen, and it is blocked from executing transactions in US dollars.

Venezuela has been selling its flagship crude grade, Merey, at around $22 per barrel below Brent for delivery at Venezuelan ports, giving a value for the deal at up to $1.9 billion.

Rodriguez, sworn in as interim president on Monday, is herself under US sanctions imposed in 2018 for undermining democracy.

Talks involve possible auctions with US buyers

Venezuelan and US officials this week discussed possible sales mechanisms, including auctions to allow interested US buyers to bid for cargoes, and issuing US licenses to PDVSA’s business partners that could lead to supply contracts, two sources told Reuters.

Those licenses have in the past allowed PDVSA’s joint venture partners and customers, including Chevron, India’s Reliance, China National Petroleum Corporation (CNPC), and European Eni and Repsol, to have access to Venezuelan oil to refine or to resell to third parties.

This week, some of those companies have begun making preparations for receiving Venezuelan cargoes again, two separate sources said.

The US and Venezuela have also discussed whether Venezuelan oil can be used in the US Strategic Petroleum Reserve in the future, one of the sources said. Trump did not refer to this possibility.

Increased oil flows would be ‘great news’

US Interior Secretary Doug Burgum said on Tuesday that an increased flow of Venezuelan heavy oil to the US Gulf would be “great news” for job security, future gasoline prices in the US and for Venezuela.

“Venezuela has an opportunity now to actually have capital come in and rebuild their economy and take advantage,” he told Fox News, when asked about talks between the governments on oil exports. “With American technology, American partnership, Venezuela can be transformed.”

US refineries on the Gulf Coast can process Venezuela’s heavy crude grades and were importing some 500,000 barrels per day (bpd) before Washington first imposed energy sanctions on Venezuela.

PDVSA has already had to cut production due to the embargo, because it is running out of storage for the oil. Without a way to export oil soon, it would have to cut production more, one of the sources said.

Oil traders reacted to news of the deal talks on Tuesday. Differentials for some heavy oil grades in the US Gulf slipped around 50 cents per barrel on Tuesday on the prospect of more Venezuelan supplies.

WASHINGTON: The White House said on Tuesday that President Donald Trump is discussing options for acquiring Greenland, including potential use of the US military, in a revival of his ambition to control the strategic island despite European objections.

Trump sees acquiring Greenland as a US national security priority necessary to “deter our adversaries in the Arctic region,” the White House said in a statement.

“The president and his team are discussing a range of options to pursue this important foreign policy goal, and of course, utilising the US military is always an option at the commander-in-chief’s disposal,” the White House said.

Greenland has repeatedly said it does not want to be part of the United States. Leaders from major European powers and Canada rallied behind the Arctic territory on Tuesday, saying it belongs to its people.

A US military seizure of Greenland from a longtime ally, Denmark, would send shock waves through the NATO alliance and deepen the divide between Trump and European leaders.

The strong opposition has not deterred Trump from reviewing how to make Greenland a US hub in an area where there is growing interest from Russia and China. Trump’s interest, initially voiced in 2019 during his first term in office, has been rekindled in recent days in the wake of the US arrest of Venezuelan President Nicolas Maduro.

Emboldened by Maduro’s capture last weekend, Trump has voiced his belief that “American dominance in the Western Hemisphere will never be questioned again,” and has put pressure on both Colombia and Cuba.

He has also started talking about Greenland again after putting it on the back burner for months.

A senior US official, speaking on condition of anonymity to discuss internal deliberations, said Trump and his advisers are discussing a variety of ways to acquire Greenland.

Greenland for sale?

Those options include the outright US purchase of Greenland or forming a Compact of Free Association with the territory, the official said. A COFA agreement would stop short of Trump’s ambition to make the island of 57,000 people a part of the United States.

The official did not provide a potential purchase price.

“Diplomacy is always the president’s first option with anything, and dealmaking. He loves deals. So if a good deal can be struck to acquire Greenland, that would definitely be his first instinct,” the official said.

Secretary of State Marco Rubio told lawmakers that recent administration threats against Greenland did not signal an imminent invasion and that the goal is to buy the island from Denmark during a classified briefing late on Monday for congressional leaders, two sources familiar with the briefing said.

The Wall Street Journal first reported Rubio’s comment.

Members of Congress, including some of Trump’s fellow Republicans, pushed back against the administration’s comments on Greenland, noting that NATO member Denmark has been a loyal US ally.

“When Denmark and Greenland make it clear that Greenland is not for sale, the United States must honour its treaty obligations and respect the sovereignty and territorial integrity of the Kingdom of Denmark,” Democratic Senator Jeanne Shaheen of New Hampshire and Republican Senator Thom Tillis of North Carolina, the co-chairs of the Senate NATO Observer Group, said in a statement.

Administration officials say the island is crucial to the US due to its deposits of minerals important for high-tech and military applications. These resources remain untapped due to labour shortages, scarce infrastructure and other challenges.

“It’s not going away,” the official said about the president’s drive to acquire Greenland during his remaining three years in office.

• Venezuela, US holding talks to export crude to US refineries.
• Talks may lead to redirecting oil cargoes originally meant for China.
• Chevron currently controls flow of Venezuelan crude to US.

Houston/Washington: Venezuela is in talks with the United States about exporting its crude oil to American refineries, a move that could mean fewer shipments heading to China. 

Government officials in Caracas and Washington are discussing exporting Venezuelan crude to refiners in the United States, five government, industry and shipping sources told Reuters on Tuesday, a deal that could divert supplies away from China while helping state company PDVSA avoid deeper output cuts.

Venezuela has millions of barrels of oil loaded on tankers and in storage tanks that it has been unable to ship due to a blockade on exports imposed by US President Donald Trump since mid-December.

The blockade was part of rising US pressure on the government of Venezuelan President Nicolas Maduro that culminated in US forces capturing him this weekend.

A potential deal to sell the trapped crude to the US could initially require reallocating cargoes originally bound for China, two sources said. The Asian country has been Venezuela’s top buyer in the last decade and especially since the United States imposed sanctions on companies involved in oil trade with Venezuela in 2020.

The supply would increase the volume of Venezuelan oil exported to the US, a flow that is currently controlled entirely by Chevron, PDVSA’s main joint venture partner, under a US authorisation.

Chevron, which has been exporting between 100,000 and 150,000 barrels per day (bpd) of Venezuelan oil to the US, has emerged in recent weeks as the only company fluidly loading and shipping crude from the South American country amid the blockade.

PDVSA has already had to cut production due to the embargo, because it is running out of storage for the oil. If PDVSA does not find a way to export oil soon, it would have to cut production more, one of the sources said.

The White House, Venezuelan government officials and PDVSA did not immediately comment. Venezuela’s oil ministry has said the US wants to steal the country’s oil reserves and denounced Maduro’s capture as a kidnapping.

US refineries on the Gulf Coast can process Venezuela’s heavy crude grades and were importing some 500,000 barrels per day (bpd) before Washington first imposed energy sanctions on Venezuela.

It was not immediately clear how sanctioned PDVSA would obtain proceeds from the oil sales.

The officials have been in talks this week about possible sale mechanisms, including auctions to allow interested US buyers to participate in cargo offers, and the issuance of US licences to PDVSA’s business partners that could lead to supply contracts, two sources said.

The parties have also discussed if the Venezuelan crude can refill the US Strategic Petroleum Reserve in the future, one of the sources said.