US sanctions against Venezuelan state-owned oil company PDVSA do not extend to its US financing arm, PDVSA US, nor to its Citgo US downstream business, not does it place any restrictions on Venezuelan oil exports to the US, a senior administration official said Tuesday.
Earlier Tuesday, the US said it would apply sanctions under the Iran Sanctions Act that would prohibit PDVSA from competing for US government procurement contracts, from securing financing from the Export-Import Bank of the US and from obtaining US export licenses.
The US claims that PDVSA has delivered at least two cargoes of reformate, a blending component, to Iran between December 2010 and March 2011. The cargoes were valued at about $50 million, the State Department said.
But a senior administration official, giving a background briefing on condition of anonymity, said that while PDVSA has applied for export licenses and export financing in the past, the company has no pending applications.
"The immediate practical impact of the sanctions will be minimal," the official said. "But it would impact possible future cooperation by these entities with the United States. But more significantly, these sanctions send a strong signal to companies around the world about the risks of dealing with Iran. So it serves as a signal, a deterrent, as much as it has a near term practical impact."
The State Department noted that tough unilateral sanctions passed by Congress last year persuaded a number of oil companies and traders around the world to stop selling to Iran, even though President Barack Obama did not actually impose the sanctions.
Neither PDVSA nor Venezuela's oil ministry have issued an official reaction to the sanctions yet. A Venezuelan lawmaker with the political party of President Hugo Chavez, however, called the sanctions "ridiculous.
"The United States can do what it wants to. We are sovereign and can decide who are our friends," lawmaker Freddy Bernal said.
The US Congress had informed PDVSA of the possible penalties they faced in doing business with Iran in a letter sent September 24. Rafael Ramirez, president of PDVSA and Venezuela's Minister of Energy and Petroleum, said then that the letter would not cause any change in the close ties between Venezuela and Iran.
In November Ramirez said that Venezuela had reduced its level of fuel exports to Iran.
