US revokes Repsol’s Venezuela oil license; Spain vows to defend company’s interests

The US government has revoked Repsol’s authorization to import oil from Venezuela, a representative of the company told news agency Reuters on Monday.

The decision is a critical blow to Repsol, with Spain’s foreign minister pledging to safeguard the company’s interests.

In response, Repsol is in active discussions with US authorities to explore ways to continue its operations in Venezuela, CEO Josu Jon Imaz said on Monday.

The company is engaged in an “open and fluid dialogue” with Washington following the revocation of its export license.

Like other foreign firms operating in Venezuela, Repsol has been formally notified of the decision, prompting Spain’s Foreign Minister José Manuel Albares to reaffirm the government’s commitment to defending the company’s interests.

A deadline for transition

A US administration spokesman said that the order for Repsol to stop business in Venezuela is consistent with the tougher position of President Donald Trump towards foreign entities that continue to trade with the country and that the company had until 27 May to finalize its business.

The severity of US policy signals an unambiguous intention to further isolate the Venezuelan government from within while it is still enveloped in political and economic crises.

The Trump administration imposed a 25% levy on other countries importing oil and gas from Venezuela, putting pressure on corporations to continue doing business with the struggling country.

Other Italian corporations have also been informed that they would no longer be able to operate in Venezuela due to the US’s ongoing efforts to restrict the flow of crude from the country through various sanctions.

Spain’s diplomatic maneuvers

Following these events, Spain’s Foreign Minister José Manuel Albares spoke on Tele 5, stating he has communicated with Repsol’s CEO.

As he said, “We shouldn’t rush until we have all the information about this decision. We need to know what it means, how it will affect us and whether there is room for dialogue to resolve the issue”.

Despite its small size and national origins, Repsol is a global giant with operations and interests all over the world, including Latin America.

Albear’s assurances on Repsol’s safety highlight the importance of energy businesses to the Spanish government. Spain has major investments in Latin America, and any unfavorable consequences could harm its economy.

International oil relations: the landscape

The previous administration permitted individual firms to purchase Venezuelan oil for use in refineries around the world, from Spain to India.

Washington has granted comfort letters and licenses to these companies to trade with Venezuela, despite sanctions.

It has also already raised awareness that the change in policy may mean a reassignment of energy partnerships and require a reassessment of business plans for companies in areas with a US face.

The impact of these changes could be multi-fold. Oil prices may react to reduced access, and firms that have been dependent on Venezuelan oil may additionally see disruption.

Not only would this impact those enterprises, but it could have serious repercussions on the world oil pipeline , compounding market forces already warped with geopolitical tensions.

What’s ahead for Repsol?

In this context, the Spanish government is taking a more proactive attitude, close to the situation, which will be decisive for Repsol’s next move.

Yet the urgency of the crisis means that, as he calls for a careful response, the stakes remain especially high.

The choices made over the next several weeks are likely to set the stage for how international energy relations are reshaped in the years to come as the U.S. sanctions regime remains in place.

Spain and Repsol are in a similar predicament where either unilateral pressure from one side will alleviate the tight grip of the US on Venezuelan oil supplies or a subtle extension by the embargo enjoyer will neutralize the force.

As May 27 approaches, Repsol faces pressure to change its operations, which may either solidify its position in the energy market or signify a withdrawal from its South American venture.

The post US revokes Repsol's Venezuela oil license; Spain vows to defend company's interests appeared first on Invezz