The Trump administration plans to force additional companies, including Chevron, to cease operations in Venezuela, heightening pressure on President Maduro. Affected companies have 30 days to comply after the US revokes their operational waivers. The cessation of operations will significantly impact Venezuela’s economy, heavily reliant on oil, potentially leading to a contraction of up to 7.5 percent this year.

The Trump administration is reportedly preparing to enforce stricter sanctions on companies operating in Venezuela, putting additional pressure on President Nicolas Maduro. Following the directive for Chevron Corp. to terminate its Venezuelan operations, the administration has indicated to firms, such as French producer Etablissements Maurel & Prom SA, that they will have a limited timeframe of 30 days to cease their activities once their waivers are revoked. Furthermore, the US Treasury may initiate this process imminently.

The cessation of these operations is likely to have a significant adverse effect on Venezuela’s fragile economy, intensifying the challenges faced by Maduro’s administration. Recently, the Treasury ordered Chevron to conclude its Venezuelan engagements by April 3, noticeably shortening the typical wind-down period of six months. Given that Venezuela’s economy relies heavily on oil, the absence of Chevron and other smaller companies will detrimentally affect growth, particularly as Venezuelan state oil company struggles due to extensive underinvestment.

Despite divergent opinions among Trump’s advisors on the best strategy for handling the Venezuela situation, a last-minute decision allowing oil companies to maintain operations is still possible. Additionally, other international firms, including Spain’s Repsol SA and Italy’s Eni SpA, await clarity on whether their operational waivers will be revoked.

The contribution of Chevron’s joint operations with Petroleos de Venezuela SA is substantial, accounting for approximately 25 percent of the Maduro regime’s total revenue in 2023 and 2024. Estimates suggest that without Chevron’s presence, Venezuela’s economy may suffer a contraction of up to 7.5 percent this year, highlighting the critical role of foreign partnerships.

In January, Trump adviser Rick Grenell’s meeting with Maduro aimed at restarting dialogue culminated in the release of six US citizens and recommencement of deportation flights. Since that engagement, 166 Venezuelan migrants have returned to their native country, with recent flights continuing until February 20. Nevertheless, Maduro has depicted the forced withdrawal of Chevron as inconsequential, asserting that it will not significantly affect oil output.

In conclusion, the Trump administration’s decision to compel companies to cease operations in Venezuela, particularly Chevron, intensifies pressure on President Maduro amidst a critically weakened economy reliant on oil. Although the repercussions of these actions could cause severe economic contraction, ongoing discussions and international engagement suggest a complex and evolving geopolitical landscape in Venezuela. The future role of foreign companies in aiding Venezuela’s economy remains uncertain as sanctions take effect.

Original Source: www.business-standard.com

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