Once A Pariah, Venezuela's Maduro Now Courted by the U.S. for Oil

After four years of suspended diplomatic relations and ongoing attempts to topple his regime, the White House has decided to resume talks with President Nicolás Maduro, a man the U.S. Department of Justice has accused of election fraud, drug trafficking and "rampant corruption."

This turnabout is motivated by a "variety of issues that certainly include energy security," said White House Press Secretary Jen Psaki.

"There was a dialogue with members of the [Maduro] administration in the past few days, and negotiations are open," she told reporters on Monday.

Prior to the invasion of Ukraine, Russia accounted for nearly 8% of all foreign oil exports into the United States in 2021, with nearly 672,000 barrels coming in per day, according to Energy Information Agency data. That number was reduced to zero on Tuesday, when President Joe Biden announced a complete ban of Russian oil imports.

While some have expressed concerns that this import ban will lead to a massive oil shortage, officials from Biden's administration remain intent on identifying other potential sources of energy to help compensate.

Venezuela, the leading producer of oil in South America, is one early candidate.

Although the nation is struggling under U.S. imposed sanctions, its natural oil reserves —18% of the world's total — outstrip those of Saudi Arabia, Canada and Iran. In the wake of a decreasing domestic oil supply, the U.S. has expressed a willingness to relax current sanctions, on the condition that Venezuela agrees to ship oil directly to the United States.

This is a deal President Maduro seems willing to take, said Shannon K. O'Neil, vice president of studies and senior fellow for Latin America studies at the Council on Foreign Relations, in an email to Newsweek.

"It was the U.S., not Venezuela, refusing to talk," she said. "Venezuela is happy to come to the table if it might mean some sanctions relief without regime change."

Maduro seemed to confirm this publicly on Wednesday.

As Venezuela's economy continues to reel — largely from the effects of U.S. sanctions — he has committed to economic growth. Key to that goal is raising the production and sale of natural resources like oil and aluminum.

"2022 is the year of economic growth," Maduro said. "This year we are going to two million barrels per day, rain or shine. This year we recover oil production hand in hand with the patriotic, revolutionary, Bolivarian and Chavista working class."

"Here lies the oil of Venezuela," he said in a speech last week, "which is available for whomever wants to produce and buy it, be it an investor from Asia, Europe or the United States."

With officials meeting in Caracas last week in the highest-level visit to the region by U.S. officials in years. Reuters reported that the two sides established what a familiar source called "maximalist" negotiating positions. Washington pressed for free presidential elections and for the release of Americans imprisoned in Venezuela, while Maduro asked for the broad lifting of sanctions.

But the most pressing topic was oil.

U.S. officials made clear their priority was to secure supplies for the United States, according to a source familiar with the negotiations. The source said that the U.S. wants Venezuela to open its industry to American companies and give them more leeway to operate. In return, the U.S. says it can provide the investments to raise oil production while helping to reintegrate the country into the world's financial system.

The two sides left without an agreement or plan to move forward. But, in an important conciliatory gesture, the government of Venezuela released two American prisoners on Tuesday — Jorge Alberto Fernández, a Cuban-American tourist arrested for bringing a drone into Venezuela, and Gustavo Cárdenas, one of six U.S. Citgo Petroleum Corporation executives detained in 2017.

While the sides have both expressed willingness to meet again in the future, there is mixed support for these negotiations in the U.S.

Scott Taylor, a former Republican congressman who works alongside pro-Venezuelan lobbyists, called for support of the talks.

"We should take this opportunity to achieve a diplomatic win and a wedge between Russia and Venezuela," he said.

But Florida Senator Marco Rubio disagrees. On Thursday he introduced a bill with bipartisan support that would ban oil and gas imports from Iran and Venezuela.

Some observers have noted that even if a relationship were established with Venezuela, its value may be far less than anticipated.

"While Venezuela has some of the biggest oil reserves in the world," the Council on Foreign Relations' O'Neil said, "their industry has been decimated first by politicization and corruption and more recently by sanctions."

Years of mismanagement, corruption and economic sanctions caused Venezuela's oil industry — which in the 1990s produced 3.2 million barrels a day — to crash by 2020, when output fell to just one-tenth of its previous volume.

O'Neil mentioned this productivity decline when asked about the long-term feasibility of partnership between the two nations.

"Today, output is in the range of 200-300,000 barrels per day, just a small part of what Russia sends out on a daily basis," she said. ""So better relations and reduced sanctions are not a short or even a medium-term solution to replace Russian oil in global markets."

The White House has yet to publicly commit to any long-term plan for continuing diplomatic relations or relaxing sanctions on Venezuela.

"Obviously, it is factual — you all know — that Venezuela is a large producer of oil," Press Secretary Psaki said in a press briefing on Wednesday. "But in terms of any decisions or discussions or where that may go from here, I have nothing to preview or predict for you on that front."

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Venezuelan President Nicolás Maduro (R) shakes hands with Russian Deputy Prime Minister Yuri Borisov after a meeting at Miraflores Presidential Palace in Caracas, on February 16. The two side signed a series of strategic agreements, including to boost their military cooperation. FEDERICO PARRA/AFP/Getty Images