The Venezuelan wild card in the US energy strategy
US President Joe Biden is looking for suppliers to replace Vladimir Putin’s “black gold” due to the Ukraine crisis and the US barring Russian imports of 672,000 barrels per day, or 8% of Washington’s total crude oil demand.
The US government approached Saudi Arabia and the United Arab Emirates in an attempt to persuade them to fully open their wells to replace Russia and contain the price of gasoline in the US, which hit a new record in April standing at an average of $4.50 per gallon, or about 3.8 liters.
After failing in those Arab countries, the Biden administration stunned everyone by sending a delegation to Caracas on March 5th. Venezuela has the world’s largest oil reserves but under Chavista industrial policy, it extracts only 650,000 barrels of petroleum per day, a fraction compared to three million two decades ago.
Venezuela is also Russia’s fiercest ally in Latin America and a significant buyer of Russian armaments. Russian Tu-160 nuclear-capable bombers have arrived at Nicolás Maduro’s court in recent years, and Putin and the Chavista regime have signed agreements allowing Kremlin warships to access Venezuelan ports. Additionally, the S300 long-range missile system purchased by former President Hugo Chávez from Moscow was recently calibrated, and Russia sold weaponry worth a billion euros to Venezuela last year.
Also, 400 mercenaries from the Wagner group, tied to Russia’s Defense Ministry, arrived in Caracas in September 2019 to “ensure Maduro’s safety”. It was a step that solidified Moscow’s role as Venezuela’s partner and acted as a deterrent to US efforts to facilitate a regime change in Caracas.
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Unlike the Gulf states, de facto President Nicolás Maduro welcomed Juan González, the White House’s top Latin America advisor; James Story, the US Ambassador to Venezuela; and Roger Carstens, Biden’s special envoy to resolve the issue of nine US hostages held by the Chavista regime for years. “We had a friendly, courteous diplomatic meeting with US and Venezuelan officials in the main presidential office. The American and Venezuelan flags looked beautiful, united as they should be,” Maduro stated during live television coverage on unified networks following the meeting.
The Venezuelan government immediately released two hostages due to the rapprochement between Washington and Caracas. According to The Wall Street Journal, the US delegation’s visit to Caracas was primarily a prelude to the US importing Venezuelan oil.
However, Maduro is a prominent international backer of Putin and has warmly embraced the Russian narrative of the Ukraine invasion to “denazify” the country. Furthermore, Venezuela is highly indebted to Moscow, which implies that any money Maduro will earn from selling oil to the US will end up in Russia, thwarting Biden’s declared objective of smearing the Putin regime.
Venezuela is not an isolated case. Latin America has become a sort of backyard for Russia in recent years to evade the Brussels and Washington sanctions and challenge the US’s historical hegemony. Moscow has been advocating for a new geopolitical order since the 1990s, namely a multipolar world where no US allies hold power.
Putin’s message to the US is straightforward: if you intervene in my “backyard”, that is, the former Soviet republics, I will interfere in yours. Today, Russian meddling in this part of the world is significant from a military and intelligence standpoint, particularly in four countries: Bolivia, Nicaragua, Venezuela and Cuba. Spies and weaponry are the explosive ingredients in Russia’s infiltration of the region.
The rapprochement between Biden and Maduro was met with widespread condemnation in the US. Republican Senator Marco Rubio stated that the President is attempting to “replace oil purchased by the United States from a murderous dictator with oil purchased from another murderous dictator.” Democrats leveled sharp criticism as well. Senator Bob Menendez, chairman of the Senate Foreign Relations Committee, stated that Biden prioritizes petroleum prices over the Venezuelan people’s fight for freedom.
Angus Berwick, a Reuters reporter, replied on Twitter to Maduro’s celebration over Washington’s oil request. “Nothing illustrates the mercenary nature of international relations than the US exploring a rapprochement with the Maduro government – accused by the UN of crimes against humanity including systemic killings and torture – to secure alternative oil supplies to Russia.”
Maduro told Washington on March 8th that the national oil giant PDVSA will be able to quickly expand output from 600,000 to three million barrels per day for “global stability.” However, analysts said it is unlikely given the state of the country’s oil industry.
In addition, Venezuela’s Vice President, Delcy Rodriguez, met with Russian Foreign Minister Sergey Lavrov in Turkey on March 10th to convince him that Chavismo is not switching sides. On the same day, Colombian newspaper El Espectador questioned Biden’s willingness to negotiate with Maduro, who the US wants for drug trafficking and narco-terrorism, and for whom a $15 million reward has been offered.
Apart from the international crisis, the US President’s choice would be influenced by the outcome of the midterm elections. If gasoline prices in the United States continue to rise in the coming months, it will put pressure on the pockets of Americans voting on November 8th.
Read also: Biden and the dilemma of a centrist President in a hyper-polarized political system
According to Pulitzer Prize-winning journalist Andrés Oppenheimer, it would be wiser to look to Guyana for lower gas prices rather than Venezuela. By mid-May, Guyana will produce 350,000 barrels per day. Over the next five years, new oil discoveries in Guyana will transform the country into one of Latin America’s top crude oil producers.
Exxon Mobil Corp. estimates that oil production will reach 800,000 barrels per day in 2025. Americas Market Intelligence revealed that Guyana will overtake Saudi Arabia as the world’s largest oil output per capita by 2035. “If Biden plans to send his negotiating team back to Venezuela for another round of negotiations, he should order them to change their aircraft tickets to Guyana immediately,” Oppenheimer recommended.