WASHINGTON (Reuters) - The Trump administration on Tuesday gave Chevron Corp CVX.N, the last major U.S. oil company still operating in Venezuela, until Dec. 1 to "wind down" its business in the OPEC member-nation and will allow it to conduct only severely limited operations there until then.

Seeking to ratchet up pressure on socialist President Nicolas Maduro, the U.S. Treasury Department imposed tight new restrictions on Chevron’s joint ventures with Venezuelan state-run oil company PDVSA, which could pave the way for the California-based company’s departure.

Chevron has had a special U.S. operating license exempting it from sanctions on Venezuela’s vital oil sector since January, but the latest three-month waiver was due to expire on Wednesday.

The action targets what some Trump administration officials say is a key financial lifeline for Maduro as Washington seeks to stifle trade in Venezuelan crude and remove his grip on power.

Chevron and other U.S. oil companies are being squeezed amid a coronavirus-induced supply glut. The collapse in oil prices has threatened to tilt the once-booming U.S. oil industry into bankruptcy. Chevron’s shares have fallen sharply over the last two days, after U.S. crude futures on Monday fell into negative territory for the first time in history.

The decision on Chevron was made after a fierce debate in the administration, with some officials arguing the United States needed to keep a corporate beachhead in the crisis-hit country, while more hawkish Trump aides said staying in Venezuela was helping Maduro keep his grip on power, according to people familiar with the matter.

Treasury’s announcement appeared to mark a partial compromise by setting a potential end point for Chevron’s operations in Venezuela, where the company has been active for about a century, while giving it more than seven months to bring it to a close.

Treasury said Chevron, under a much more restrictive temporary license, would be allowed only to conduct transactions with PDVSA “necessary for the limited maintenance of essential operations in Venezuela or the wind down of operations” by the beginning of December.

Chevron would be barred from the drilling, sale and transport of Venezuelan oil, infrastructure work except for safety reasons and any financial transactions with PDVSA. Treasury stopped short of formally ordering Chevron out of Venezuela, but will allow so little activity there that it might be untenable to stay.

FILE PHOTO: A Chevron gas station sign is seen in Del Mar, California, in this April 25, 2013 file photo. REUTERS/Mike Blake/File Photo

The announcement also covered oilfield service firms Baker Hughes Co BKR.N, Halliburton Co HAL.N, Schlumberger NV SLB.N and Weatherford International, which had regularly received U.S. permission to remain in the country. The four services firms, however, have already largely ceased operations in Venezuela.

Chevron spokesman Ray Fohr said the company will comply with applicable laws and regulations on activities it is authorized to undertake in Venezuela. Fohr said Chevron is committed to its employees and its social and humanitarian programs in Venezuela.

‘MAXIMUM PRESSURE’

The Trump administration has waged a “maximum pressure” campaign of sanctions and diplomatic measures in an effort to oust Maduro, whose 2018 re-election was considered a sham by most Western countries.

Venezuela’s oil exports have dropped by one-third since the United States and dozens of other countries recognized opposition leader Juan Guaido as the country’s legitimate interim president in January of last year.

But Maduro remains in power, backed by Venezuela’s military as well as Russia, China and Cuba. Some U.S. officials have said this has been a growing source of frustration for President Donald Trump.

Washington has ramped up sanctions on Venezuela in recent months. Treasury recently blacklisted two trading units of Russian oil giant Rosneft ROSN.MM, for conducting business with PDVSA. Rosneft accused Washington of double standards for allowing U.S. companies to continue working in Venezuela.

Chevron’s waiver allowed it to continue producing oil in collaboration with PDVSA and trade cargoes of Venezuelan crude in international markets.

Some U.S. officials justified the waiver extensions as a way to help Venezuela safeguard its crumbling oil infrastructure for a future democratic government. They also argued that Russia could fill the void if Chevron pulled out.

Chevron holds stakes in four oil and gas joint ventures with PDVSA. Those include two of Venezuela’s largest oil fields - Petroboscan in western Zulia state and Petropiar in the Orionoco oil belt - which together produce around a quarter of the country’s total crude output.

Chevron last month canceled service contracts and procurement processes at the two joint ventures, a move the company attributed to falling crude prices. The company said its share of output at its joint ventures dropped 16% in 2019 to 35,000 barrels per day, mirroring the decline in crude output across the country.