US Secretary of State Rubio: Western oil companies may return to Venezuela; US sanctions will continue until oil industry governance reforms are implemented

The Zhitong Finance App learned that US Secretary of State Marco Rubio said on Sunday that the Trump administration expects Western energy companies to show strong interest in returning to Venezuela, but it is not clear whether the US will send troops to protect the oil infrastructure.

Rubio said in an interview that the US government's focus is not on physical control of oil assets, but rather on enforcing sanctions related to the country's energy sector governance reforms.

“It's not about ensuring the safety of oil fields,” Rubio said. It's about making sure that until the entire way the industry is governed is reformed, no sanctioned oil can go in or out.”

Rubio said he himself hasn't talked to American oil executives in recent days, but said that if restrictions are relaxed, the White House expects Western companies to show “great interest.” He added that when conditions are right, private businesses will be eager to re-enter the market.

“I think the private industry will have huge demand and interest to get involved if space and opportunity are given,” he said.

Currently, Chevron (CVX.US) is the only US oil producer operating in Venezuela, based on a special license granted by Washington.

Venezuela has the largest proven oil reserves in the world and continues to export hundreds of thousands of barrels of oil every day. However, Rubio said that even after former leader Nicolas Maduro is overthrown, the US will maintain a strict enforcement position on sanctioned Venezuelan oil.

“If you're a sanctioned ship and it's sailing to Venezuela, you'll be impounded while sailing in or out,” he said while describing the sanctions regime's “devastating” impact on Maduro's former government.

Rubio painted a bleak picture of the country's oil industry, believing that it had actually collapsed after years of mismanagement and corruption.

“These oil fields are basically pirate operations,” he said. A small group of people profit from these specific oil wells by stealing oil directly from the ground. Due to poor equipment, their production capacity was only about 18%, and they basically put the money in their own pockets. They sell oil at discounted prices on the global market. You know, it's about 40% off or 50% off the original price.”

He added that over the years, Venezuela's energy wealth has failed to benefit ordinary citizens.

“These oil fields have not benefited the Venezuelans for over a decade. They only made very few people millionaires and billionaires. That's why this regime has been maintained. This is exactly the problem that needs to be solved,” Rubio said.

According to Rubio, sanctions in the US will continue to be imposed until the Venezuelan oil industry is restructured to serve the general public rather than a solidified elite.

“For the benefit of the Venezuelan people, the solution to this problem is for private companies — not from Iran or elsewhere — to enter and invest in infrastructure,” he said. “People who do these things know what to do.”