The US intends to have significant control over Venezuela's oil sales after the capture of President Nicolas Maduro, Energy Secretary Chris Wright said on Wednesday, claiming Washington needs control over the country's petroleum revenue to bring about change.
Mr Wright told an energy forum in Miami that the US would "indefinitely" sell production coming out of Venezuela, with that revenue being “deposited into accounts controlled by the US government”.
On Tuesday, Caracas and Washington reached a deal in which Venezuela would be “turning over” between 30 and 50 millions barrels of “sanctioned oil” to the US, according to President Donald Trump. Mr Wright will carry out the plan, Mr Trump said.
Mr Wright told the Goldman Sachs Energy, CleanTech and Utilities Conference: "If we control the flow of oil, the sales of that oil, and the flow of the cash that comes from those sales, we have large leverage, but without large leverage … you don't get change.”
Venezuela's state-run oil company PDVSA said it is progressing in negotiations with the US for oil sales, Reuters reported.
Mr Trump is expected to meet executives from the top three US oil companies to discuss Venezuela on Friday. Chevron is the only US oil company with operations in the South American country. ConocoPhillips and ExxonMobil operated in Venezuela before their assets were seized in 2007.
Venezuela produced 3.5 million barrels per day in 1999 but production has since declined to about 1.1 million.
Mr Wright said Venezuela's infrastructure is “not good”.
“Decades of under-investment, decades of corruption … just degrades infrastructure,” he said.
Mr Wright estimated output could increase by several hundred thousand barrels a day in the short to medium term. Mr Trump has suggested US oil companies would take over rebuilding Venezuela's energy infrastructure, which could cost billions of dollars.
He said he would ask oil companies what conditions would be necessary for them to make such investments.
After a classified briefing to US senators, Secretary of State Marco Rubio said there is now a process in place where Washington has influence over what the interim authorities in the Venezuelan government "are doing and are able to do".
"But obviously, this will be a process of transition. In the end, it will be up to the Venezuelan people to transform their country."
Democratic politicians have condemned the US "process" as theft.
"They are talking about stealing the Venezuelan oil at gunpoint for a period of time undefined as leverage to micromanage the country. The scope and insanity of that plan is absolutely stunning," Senator Chris Murphy told reporters.
Meanwhile, China denounced the US for its “blatant interference” in Venezuela, accusing it of breaking international law and emphasising the country's sovereign right to its natural resources.
A report from the Institute of International Finance noted Venezuela's oil exports are highly concentrated, with about 80 per cent going to China.
The report said a "more co-operative political alignment" with the US would be expected to result in a redirection of flows towards US refiners that have a high demand for heavy crude.
"The key question for markets is whether this transition evolves into a credible stabilisation and reform path that unlocks higher Venezuelan production over time, or whether political and institutional frictions delay that upside," authors Maria Paola Figueroa and Martin Castellano wrote.
