By Timothy Gardner and Marianna Parraga
March 18 (Reuters) - The U.S. issued a waiver on Wednesday broadly authorizing U.S. companies to do business with Venezuela's state-run oil company PDVSA, a key step that could secure investment and, in the longer-term, increase the country's crude production capacity.
Washington has been easing sanctions on Venezuela since U.S. forces captured President Nicolas Maduro in January, with the U.S. government taking control of the OPEC country's oil sale proceeds
through a fund.
The general license issued by the Treasury Department does not remove all sanctions on PDVSA - in force since 2019 - but is a bold step called for by interim President Delcy Rodriguez to reactivate the company's core operations and boost sales after a strict U.S. oil blockade knocked down output and exports. It also follows a law reform approved in late January to encourage investment.
The Treasury's action is part of an attempt by the Trump administration to alleviate pressure on oil markets caused by the war with Iran.
"This license will benefit both the United States and Venezuela, while supporting the global energy market by increasing the supply of available oil. It will also help incentivize new investment in Venezuela's energy sector," a Treasury spokesperson said.
Venezuela has in recent weeks been exporting oil almost at top capacity, mostly through partner Chevron and global trading houses Vitol and Trafigura. March exports are forecast to reach pre-blockade levels of around 900,000 barrels per day.
Analysts have warned any additional output increase will require infrastructure repairs, oil and gas project expansions and new supply agreements and partnerships, which have been under negotiation between foreign firms and PDVSA in recent months.
"The reality is, Venezuela doesn't have the infrastructure, it's not like it has the ability to just start ramping up output of oil," said Brett Erickson, a managing principal at Obsidian Risk Advisors.
PDVSA did not immediately reply to a request for comment.
LESS PRESSURE
The waiver to sanctions that President Donald Trump imposed on PDVSA during his first term is meant to draw additional companies to help produce or export oil from Venezuela, which has the world's largest reserves of crude, most of which are extra heavy and need processing before export.
Venezuela's oil production early this month was about 1.05 million bpd, or about 1 percent of global production, an increase from 878,000 bpd in early January when the U.S. blockade forced deep output cuts.
Trump is trying to get energy companies to invest $100 billion in Venezuela's dilapidated oil business, which has suffered from years of neglect, corruption and U.S. sanctions.
But analysts say encouraging large investors to return to the country after nationalizations two decades ago will require a stable legal framework and fiscal incentives that, according to some companies, have not been fully granted under the recent law reform.
Many small producers and investors, however, are looking for early deals that could secure profits, while PDVSA's traditional partners, including Chevron, Shell, Repsol, Eni and BP are seeking project reactivation or expansions.
(Reporting by Bhargav Acharya in Toronto, Timothy Gardner in Washington and Marianna Parraga in Houston; Editing by Katharine Jackson, Chizu Nomiyama and Nia Williams)
