US will control Venezuela oil sales ‘indefinitely’, official says

The United States will control sales of sanctioned Venezuelan oil “indefinitely” as it prepares to lift restrictions on the country's crude oil on world markets, the White House said.

Officials said sales are expected to start with 30 million to 50 million barrels of oil, with proceeds controlled by the U.S. government to maintain influence over the Venezuelan government.

“We're going to let the oil flow,” Energy Secretary Chris Wright said at a conference with energy executives in Miami.

It is unclear how much of the proceeds from the sale, which analysts expect to be around $2.8bn (£2.1bn), will be shared with Venezuela.

“We need leverage and control over oil sales to drive the changes that simply need to happen in Venezuela,” Wright said, adding that some of the money would then “flow back into Venezuela.”

White House officials said Wednesday they have already taken steps to begin selling oil, and the administration is working with key banks and commodity companies to make the sales happen.

As part of the plan, the US is preparing to “selectively” lift US sanctions that have limited sales of Venezuelan oil for decades.

The comments provided further insight into the plans, which US President Donald Trump announced on social media on Tuesday.

He said Venezuela would “transfer” up to 50 million barrels of oil to the United States and sell it at market prices.

The money will be transferred to US-controlled accounts, which Trump said as president he would control and use for the benefit of the people of Venezuela and the US.

US Secretary of State Marco Rubio said the goal was to pay out the money “in a way that benefits the Venezuelan people and not the corruption and the regime, so we have a lot of leverage to move forward on the stabilization front.”

Analysts say the impact of the policy change will depend on the details. like the pace of sales.

But the plan has drawn sharp criticism from Democrats, with Connecticut Sen. Chris Murphy calling it “crazy.”

“They are talking about stealing Venezuelan oil at gunpoint over a period of time that cannot be defined as leverage to micromanage the country,” he told reporters. “The scale and insanity of this plan is simply mind-boggling.”

Venezuela has some of the world's largest proven oil reserves, but years of disinvestment, poor management and U.S. sanctions have left its output at just about a million barrels a day – less than 1% of global output.

This reserve, which provided important resources to the Venezuelan government, In recent years he has been traveling mainly to China.

But that too has been undermined in recent months after the US stepped up strikes and blockades of Venezuelan tankers as part of its pressure campaign against Maduro.

On Wednesday, Beijing's foreign minister condemned the US takeover of Maduro and US plans to take control of Venezuela's oil resources.

Trump is scheduled to meet with oil executives at the White House on Friday.

Analysts say that in the short term, U.S. oil company Chevron and U.S. refineries that are built to process the “heavy” crude typical of Venezuela's output are well positioned to benefit from increased oil flows from Venezuela.

Chevron is the last major U.S. oil company to operate in Venezuela, although several other European firms have offices there.

A diversion of Venezuelan oil to the United States could put pressure on Mexico and Canada, which produce similar crude and are currently major suppliers of crude to U.S. refineries.

Oil prices, already relatively low amid stable supply and subdued demand expectations, have fallen further over the past week on the prospect that Venezuela could expand access to the global market.

But analysts warn that a significant expansion of manufacturing in the country will require years and billions of dollars in investment, which companies may be hesitant to undertake given less risky opportunities in the US and other countries such as Guyana.