Chevron Corp. recently filed tax returns worth approximately $300 million with the Venezuelan government, raising questions about the extent to which the U.S. oil giant may be indirectly funding the regime of President Nicolás Maduro despite existing U.S. sanctions. The filings, made under Chevron’s Venezuelan affiliate Chevron Global Technology Services Company, reveal that Chevron’s ventures in Venezuela owed 8.1 billion bolivars to the country’s tax agency, Seniat, as of March 2024.
Chevron, which operates under a special license from the U.S. government, has yet to clarify whether or how it has paid these taxes. A company spokesperson emphasized that Chevron adheres to all applicable laws and regulations in Venezuela, but the filing of taxes may be in direct conflict with the restrictions set by the U.S. Treasury’s Office of Foreign Assets Control (OFAC).
Chevron’s tax filings include substantial sums from its joint ventures with Venezuela’s state-owned oil company, PDVSA. The company’s Petropiar venture reported an income tax of $217 million for 2023, while Petroboscan declared $83 million. These figures are based on an exchange rate of 27 bolivars per dollar, and represent a fraction of the company’s larger financial obligations in the country. Under Venezuelan law, foreign oil companies must pay substantial royalties and taxes on production, including a mandatory third of oil output in royalties to the state.
These tax payments are particularly contentious as they may contravene U.S. sanctions. General License 41, issued by OFAC, prohibits Chevron from paying taxes, royalties, or dividends to PDVSA or any other state-controlled entity. It also restricts the company from expanding operations or selling oil outside the U.S.
U.S. lawmakers have expressed concerns over the implications of Chevron’s activities in Venezuela. Representative María Elvira Salazar, a Florida Republican, condemned Chevron’s dealings, accusing the company of “enabling oppression” and profiting from Venezuela’s authoritarian regime. “Their licenses have to go,” she said in a statement.
Chevron’s operations in Venezuela have gained additional scrutiny as President-elect Donald Trump is expected to take a tougher stance on the Maduro regime than his predecessor, President Joe Biden. Trump’s administration had previously imposed stringent sanctions on Venezuela, but Biden eased some restrictions in 2022 to allow Chevron to resume limited oil production in Venezuela as part of a broader diplomatic push aimed at facilitating democratic elections in the country. This move, however, has faced criticism as Maduro has failed to uphold election promises and has further consolidated power.
Marco Rubio, the U.S. Secretary of State nominee, reiterated these concerns during his Senate confirmation hearing, accusing Chevron and other companies of funneling billions of dollars into the Venezuelan government without any tangible benefits for the country’s population. “All that needs to be re-explored,” Rubio added, hinting at potential revisions to Chevron’s license.
In response to these developments, Venezuelan government bonds experienced slight declines, reflecting market uncertainty regarding the future of Chevron’s operations in the country.
Despite these concerns, Chevron’s license to operate in Venezuela remains intact, at least for now. The U.S. Treasury Department has continued to support the license as part of its broader policy to encourage a peaceful restoration of democracy in Venezuela. However, the situation has only grown more complicated as Maduro’s regime tightens its grip on power, including the disqualification of opposition candidates, the detention of political dissidents, and the consolidation of power through increasingly authoritarian measures.
The Biden administration has also intensified sanctions in response to Maduro’s actions. Recently, the U.S. offered financial rewards for the capture of Maduro and his key allies, while imposing individual sanctions on several Venezuelan officials. Despite this, Chevron’s operations remain largely unaffected, with the company continuing to pump roughly 200,000 barrels of oil per day—nearly 23% of Venezuela’s total production.
The oil industry remains a vital lifeline for Venezuela, with foreign investment helping to stabilize the country’s economy and curb inflation. Analysts predict that Venezuela’s oil production could rise to 1 million barrels per day by 2025 before facing a potential slowdown in the following years. The influx of foreign currency from companies like Chevron has been credited with helping to reduce Venezuela’s once sky-high inflation rates.
In recent years, however, the Maduro government has increasingly relied on an “anti-blockade law” to modify joint ventures and obscure the flow of profits from its oil industry. This legislation allows the Venezuelan government to adjust partnerships with foreign companies without public disclosure, a move opposition legislators have decried as an attempt to conceal the true extent of the country’s oil revenues.
In 2022, Maduro granted Chevron more control over its operations in Venezuela to help repay debt and boost oil production. This shift marked a departure from the government’s historically strict control over the oil industry, which is home to the world’s largest proven oil reserves.
Chevron is not alone in its involvement in Venezuela’s oil sector. Other international oil companies, including India’s Reliance Industries, Spain’s Repsol, and France’s Maurel & Prom, have also continued to operate in the country under similar sanctions waivers. Despite these restrictions, Chevron remains one of the largest foreign producers in Venezuela, playing a significant role in the country’s economic recovery—albeit amid growing controversy and political scrutiny.
Related topic:
U.S. TikTok Ban Puts Advertisers on Edge as Deadline Looms
Nasdaq Takes Major Step Toward Listing Canary Capital’s Spot Litecoin ETF
