Go to the Globe and Mail homepage

Jump to main navigationJump to main content

AdChoices
The logo of the Venezuelan state oil company PDVSA is seen at a gas station in Caracas, Venezuela March 2, 2017. (CARLOS GARCIA RAWLINS/REUTERS)
The logo of the Venezuelan state oil company PDVSA is seen at a gas station in Caracas, Venezuela March 2, 2017. (CARLOS GARCIA RAWLINS/REUTERS)

Venezuela’s cash-strapped PDVSA offers Rosneft oil stake: sources Add to ...

Venezuelan state oil company PDVSA has offered Russian counterpart Rosneft a stake in a joint venture in the country’s Orinoco Belt extra-heavy crude area, five industry sources said, in a sign of the Latin American nation’s dire economic situation and Moscow’s growing muscle there.

Rosneft, Russia’s top oil producer, has been offered a 10 per cent stake in the Petropiar joint venture.

PDVSA, as Petróleos de Venezuela SA is known, has a 70 per cent share, and U.S. oil company Chevron Corp holds 30 per cent of the venture, which includes an oil field and a 210,000 barrel-per-day oil upgrader.

Two sources said the offer was part of a larger package offered to Rosneft as PDVSA seeks to raise money to pay suppliers and bond holders.

It is unclear if Rosneft will accept the offer. Financial details of the potential transaction were not immediately available.

PDVSA and Venezuela’s Oil Ministry did not respond to requests for comments. Chevron and Rosneft declined to comment.

A deal would see California-based Chevron working alongside state-owned Rosneft, which has been affected by U.S. sanctions against Russia.

But Chevron’s main concern is that accounting and transparency laws are less strict in Russia than in the United States, a source close to the matter said.

The proposal highlights Venezuela’s need for cash after the nation’s oil output fell about 10 per cent last year, according to the Organization of the Petroleum Exporting Countries. This has worsened a recession that has millions of Venezuelans skipping meals amid food shortages and spiraling inflation.

The opposition-controlled National Assembly says President Nicolas Maduro’s unpopular government is resorting to surreptitiously selling strategic assets to weather the unprecedented crisis.

“Any deal of national interest must be approved by the National Assembly,” tweeted lawmaker Jose Guerra, head of congress’ finance commission, in reaction to Reuters’ article. “If PDVSA sells 10 (per cent) of Petropiar to Rosneft, that sale is null and void.”

Moscow’s muscle

Rosneft has already been gaining ground in Venezuela, an OPEC member.

Last year, the company paid $500-million to increase its stake in the Petromonagas joint venture from 16.7 per cent to 40 per cent, the maximum foreign partners are allowed to have under oil sector regulations created under late leader Hugo Chavez.

“The ballpark value of the two projects (Petromonagas and Petropiar) probably isn’t that different,” said Francisco Monaldi, fellow in Latin American energy policy at the Baker Institute in Houston.

The Petromonagas sale also raised the ire of the National Assembly, which said the purchase was illegal because Congress did not approve it. Critics have also said the stake was sold too cheaply.

In another controversial move, PDVSA last year used 49.9 per cent of its shares in coveted U.S. subsidiary Citgo as collateral for loan financing from Rosneft.

PDVSA said this month it had received $1.985-billion from an unnamed client in return for future oil shipments, with Citgo shares used as a guarantee.

In total, Rosneft has lent PDVSA between $4-billion and $5-billion, but the details of those deals have not been disclosed.

“We must thank life that Russia and the world have a Vladimir Putin,” Maduro said at a deal-signing event with Rosneft head Igor Sechin last year.

“I wanted to be here at this event because of how important relations with the new Russia are.”

Report Typo/Error

Also on The Globe and Mail

Carbon price not behind Shell’s oil sands sale: McKenna (The Canadian Press)

Next story

loading

Trending

loading

Most popular videos »

More from The Globe and Mail

Most popular