US to lift Venezuela oil, gas sanctions in exchange for country's vow to hold more open elections
The oil for democracy deal could increase Venezuelan production by 25%, should it become permanent.
The Biden administration struck a deal Wednesday with Venezuela in which its socialist government will allowing more competitive elections in exchange for the U.S. easing sanctions on the Venezuelan oil and gas sector.
The agreement will extend tentatively to April 2024 expire and authorizes financial transactions within the Venezuelan energy sector and gold mining industry that were previously prohibited.
The U.S. will have to option under the agreement to reinstate the sanctions should President Nicolás Maduro's administration not follow through on their commitments.
According to a Treasury Department statement, the U.S. government intends to renew the agreement if Venezuela keeps up its end of the deal.
Bloomberg reports that the lifting of the four-year-old sanctions will allow Venezuela to pump 200,000 more barrels of crude per day, which amounts to an increase of 25% in production.
The figures are based on the assumption that the sanctions will be largely removed, which isn't certain at this point.
Venezuela's output is now roughly 800,000 barrels a day, most of which goes to China, according to Reuters. It’s an increase over the 374,000 barrels a day Venezuela produced in June 2020, but a large decrease from the 3 million barrels a day the country produced in the 1990s, according to Bloomberg.
The U.S. oil and gas industry has been critical of the administration for what it considers it willingness to facilitate increased production in foreign countries hostile to the United States, while making domestic production more difficult and costly.