In 2024, Spain saw a record high in crude oil purchases from Venezuela, reaching three million tons, a 116% increase from 2023. Most of these barrels were imported by Repsol. Therefore, the oil company would be the most affected Spanish company if Donald Trump's threat to revoke the licenses granted by the Biden Administration to U.S. and European oil companies to operate in the country led by Nicolás Maduro becomes a reality. In the case of Repsol, 1.1 billion is at stake due to the latest protectionist move by the Republican leader.
In its latest annual report, Repsol acknowledges a financial exposure to Venezuela of 504 million, nearly 95% higher than the 259 million recognized a year earlier. This is in addition to the historical debt that the state-owned firm Petróleos de Venezuela (PDVSA) owes Repsol, which amounted to 634 million as of the end of 2024.
The mentioned credit line is part of a barter relationship that the Spanish oil company has maintained with the Venezuelan government for years. Repsol's main activity in this country is not oil but the exploitation of gas that Venezuela uses to power its electrical system. This is done through the Cardón joint venture, in which the company holds a 50% stake alongside the Italian company Eni.
Both partners have been receiving barrels of crude oil as payment from the Venezuelan government in exchange for the gas. This exchange was reactivated following the license granted by the U.S. Office of Foreign Assets Control (OFAC), allowing European energy companies to "recover outstanding debt and dividends from joint ventures in Venezuela through the lifting of oil charges." Subsequently, on May 21, 2024, OFAC granted Repsol another specific license to "develop oil and gas projects in Venezuela and expand its business."
Under the umbrella of Joe Biden's grace period, Repsol has taken advantage of signing several agreements with PDVSA, allowing for the incorporation of new fields and increasing production at Petroquiquire, a joint venture where Repsol holds 40% and the state-owned company Petróleos de Venezuela holds the rest. All this is aimed at gradually recovering the outstanding debt in the form of tons of crude oil. These licenses are precisely what Washington is now threatening to suspend. If the permits are revoked, Repsol will not be able to collect on that debt.
Despite the relief that Biden's administration brought to its operations in Venezuela, the oil company has been considering the country as one of the geopolitical risks it faces for years. In 2024, according to the company's management report, Repsol conducted training sessions for its Board of Directors on the Venezuelan business situation. Given the high level of uncertainty, Repsol has been provisioning for the risk in Caracas in its accounts, meaning it has been setting aside part of its income to build a cushion that would mitigate the impact if needed. However, the relief would be partial, and the blow would still be felt on the balance sheet.
Trump has not specified concrete measures or timelines for the potential suspension of permits in Venezuela for European energy companies, but his Secretary of State, Marco Rubio, stated yesterday in X that he is already giving instructions to "end all support" for licenses approved under the Biden Administration that "have shamefully financed the illegitimate regime of Maduro."