US to channel Venezuelan oil royalties into treasury fund

The US Department of Treasury (DoT) said it plans to channel Venezuelan crude oil royalties and federal taxes into its Foreign Government Deposit Funds.

IMAGE: Flags of the US and Venezuela. Getty Images

International firms producing oil in Venezuela will pay domestic levies to Caracas, but royalties and federal tax proceeds will instead be channelled into US DoT-administered fund, the agency stated under a ‘Frequently Asked Questions’ section.

Additionally, payments from fixed per-barrel production levies, and “federal taxes to blocked persons,” such as the government of Venezuela or state-owned Petróleos de Venezuela (PdVSA), will be made to the DoT, it said.

The new rule comes following the issuance of two general licenses for oil companies operating in Venezuela – one authorising activity related to the export, sale, transport, and storage of Venezuelan crude oil, the other removing curbs on technology and equipment supply for developing the country’s energy sector.

Washington assumed effective control over Venezuela’s oil exports after President Nicolás Maduro was detained by US forces earlier in January.

The news had led to supply concerns in the global oil market – prompting a spike in Brent crude’s price. The Donald Trump-led government has since begun easing some sanctions on the OPEC member’s energy sector.

Venezuela is a founding member of the Organization of the Petroleum Exporting Countries (OPEC). It controls almost 17% of global oil reserves, or 303 billion bbls, according to industry consultant Enverus.

By Aparupa Mazumder

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