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US slaps sanctions on Venezuela’s state oil company

Mandel Ngan, AFP | US Treasury Secretary Steven Mnuchin at a briefing in the White House on January 28, 2019.

The United States imposed sanctions on Venezuela's state oil company PDVSA on Monday in the latest effort to ramp up pressure on the country's President Nicolas Maduro.

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US Treasury Secretary Steven Mnuchin said the sanctions prevented Maduro from diverting more resources from the crisis-damaged country until control in Caracas could be transferred to an interim government or new democratically elected government.

However, Mnuchin said PDVSA's US-based subsidiary Citgo would be able to continue operations, as long as its earnings were deposited into a blocked account in the United States.

Minutes before the announcement, Juan Guaido, the Venezuelan opposition leader who proclaimed himself interim president last week, said congress would name new boards of directors to both PDVSA and Citgo.

Maduro, in a live national broadcast on Monday, accused the US trying to steal Citgo, Venezuela's OPEC member's most important foreign asset. He said Venezuela would take legal actions in response.

US President Donald Trump last week immediately recognised Guaido as Venezuela's president, sparking a standoff with Maduro.

Washington "is holding accountable those responsible for Venezuela's tragic decline, and will continue to use the full suite of its diplomatic and economic tools to support Interim President Juan Guaido, the National Assembly, and the Venezuelan people's efforts to restore their democracy", Mnuchin announced at the White House.

US slaps sanctions on Venezuela’s state oil company

"Today's designation of PDVSA will help prevent further diverting of Venezuela's assets by Maduro and preserve these assets for the people of Venezuela. The path to sanctions relief for PDVSA is through the expeditious transfer of control to the Interim President or a subsequent, democratically elected government," he said.

PDSVA is the acronym for the state-owned oil company.

Maduro accused of using oil money to keep military support

Senator Marco Rubio, a vocal critic of Maduro who has called for such sanctions, welcomed the move even before it was announced.

"The Maduro crime family has used PDVSA to buy and keep the support of many military leaders," Rubio said. "The oil belongs to the Venezuelan people, and therefore the money PDVSA earns from its export will now be returned to the people through their legitimate constitutional government."

The sanctions will not likely affect consumer prices at the gas pump but will hit oil refiners, particularly those on the US Gulf Coast.

Venezuela reliant on US oil revenues

Venezuelan oil exports to the US have declined steadily over the years, falling particularly sharply over the past decade as its production plummeted amid its long economic and political crisis. The US imported less than 500,000 barrels a day of Venezuelan crude and petroleum products in 2017, down from more than 1.2 million barrels a day in 2008, according to the Energy Information Administration.

Still, Venezuela has consistently been the third- or fourth-largest supplier of crude oil to the US, and any disruption of imports could be costly for refiners. In 2017, the most recent year that data were available, Venezuela accounted for about 6 percent of US crude imports.

Valero and Citgo are among the largest importers of Venezuelan crude.

But Venezuela is very reliant on the US for its oil revenue. The country sends 41 percent of its oil exports to the US. Critically, US refiners are among the few customers that pay cash to Venezuela for its oil. That's because Venezuela's oil shipments to China and Russia are usually taken as repayment for billions of dollars in debts.

(FRANCE 24 with AFP, AP and REUTERS)

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