News // Politics
Russia vows to defend its Venezuelan oil assets
31 January 2019 , 16:08Neftegaz.RU879
Moscow, January 31 - Neftegaz.RU. Russia, which stands by Nicolas Maduro in the ongoing Venezuelan political crisis, will use «all available legal mechanisms» to defend its interests in the Latin American country, in which Russian Rosneft has invested and extended loans to Venezuela’s state oil firm in exchange for crude oil deliveries, Oilprice reported.
Russia will defend its interests in Venezuela within the international law using «all mechanisms available to us», Dmitry Peskov, spokesman for President Vladimir Putin, told Russian media. Russia has kept close ties with Maduro and has extended loans to Venezuela, including Rosneft lending money to Venezuela’s PDVSA.
Rosneft has extended $6 billion of loans to PDVSA, which needs to be fully redeemed in crude oil supplies by the end of this year. According to Platts, as of November 2018, Venezuela had $3.1 billion outstanding loan to repay to Rosneft. The Russian company also has 5 joint upstream projects with PDVSA in Venezuela.
However, the U.S. Treasury slapped another round of sweeping sanctions against PDVSA, in order to «help prevent further diverting of Venezuela’s assets by Maduro and preserve these assets for the people of Venezuela.» Russia is assessing the potential consequences of the sanctions on PDVSA for Moscow, Peskov added.
According to analysts briefed by Platts, whatever the outcome of Venezuela’s political impasse, Rosneft won’t be cut off from Venezuelan oil assets, as oil is pretty much the only hard-currency revenue the country can get. An analyst at a Western bank estimates Rosneft’s assets in Venezuela at up to $2.5 billion, plus another $2.5 billion in crude supplies for the loan to PDVSA.
«The worst-case scenario - which is unlikely to materialize - under which Rosneft loses all the money it invested in Venezuela, would be biting but not critical for the company, with quarterly free cash flow at over $4 billion», the analyst told Platts.
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