By Tsarizm Staff | April 8, 2020
In order to escape from American sanctions on Venezuela, Moscow has been working some jujitsu with its state-owned oil giant Rosneft. The Russian oil company is selling its Venezuelan business to another state-owned entity. But there is more going on behind the curtain.
Moscow has worked hard to cement influence and access to oil reserves in the Latin American country, even going so far as to brag about building Russian military bases in the Caribbean. This apparently triggered the Trump administration which is now actively pushing for regime change in Caracas, even putting a bounty out on Venezuelan President Nicolas Maduro’s head.
According to independent Russian news outlet, The Bell:
- All Rosneft’s joint ventures, service companies and trading operations in Venezuela will be passed to a state-owned entity, according to a statement [2] published Saturday. In return, Rosneft will receive a 9.6 percent share of the company’s own equity, which is worth $3.8 billion.
- The government controls Rosneft through state-owned holding company Rosneftegaz, which has a 50 percent plus one share in the oil giant. While the deal’s structure is secret, it is likely Rosnefttegaz’s holding will now fall to 40.4 percent, meaning the state loses its majority stake. It is unclear what Rosneft will do with the shares, but the company has been buying equity on the market since August 2018. There was speculation [3] (Rus) a share package of up to 13 percent could now be sold to a private investor, or even distributed to management.
- Dumping its assets in Venezuela will help Rosneft evade U.S. sanctions — its subsidiaries Rosneft Trading and TNK Trading were sanctioned [4] this year for working with Venezuelan state oil company Petroleos de Venezuela (PDVSA). U.S. officials said [5] Thursday that, if Rosneft stopped its work with PDVSA, the sanctions on Rosneft Trading and TNK Trading would be lifted.
- In recent years, Rosneft has played a central role [6] in Russia’s support for embattled Venezuelan President Nicolás Maduro, providing financing and helping sell oil. Maduro tweeted [7] Tuesday that Putin has reassured him of Russia’s continued support after the deal, and it looks likely Rosneft will retain influence over Russia’s ties with Venezuela. The state-owned company widely assumed to be in line to take over Rosneft’s Venezuelan assets, Roszarubezhneft, was created the same day as the deal was announced. Roszarubezhneft’s CEO will be Nikolai Rybchuk, reportedly a colleague of Sechin during his work in Angola in the 1980s as a security officer.
Why the world should care The deal is a big win for Sechin. Not only does it allow Rosneft to escape U.S. sanctions, but the company also builds up its pile of treasury shares, and gets rid of unprofitable assets badly hit by oil price woes and Venezuela’s accelerating [8] coronavirus outbreak.
You can read more about the situation at the independent Russian news outlet, The Bell. [9]
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This piece originally appeared on Tsarizm.com [12] and is used by permission.