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Russia’s Gazprombank leaves Venezuela. Rosneft still stays.

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Aleksei Afonin

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Russia’s Gazprombank leaves Venezuela. Rosneft still stays.

 

Moscow, Russia. March 15, 2019

Gazprombank is minimizing risks in Venezuela. The bank has sold a 17% stake in GPB Global Resources which, in turn, owns 40% of Petrozamora, a joint venture with PDVSA, Reuters stated on March 14. The bank has confirmed the fact of leaving the joint venture without specifying any details.

Petrozamora was founded in 2012 to develop oil fields in Venezuela. In 2013, Gazprombank, GPB, Petrozamora, and PDVSA agreed to allocate up to $1 billion for the development of the joint venture. Now, Gazprombank does not have any investment projects in Venezuela.

 Rosneft has become the only Russian company with large assets there, Kommersant noted. According to Reuters, the Russian giant oil company has lost about $9 billion on its investments in Venezuela since 2010. Rosneft is running five projects in Venezuela while producing a small share of its total oil production. The crisis in Venezuela involves the risk that the country will not be able to pay its debts.

Back in 2011, more than 66% of the Neftegaz.Ru survey respondents approved the participation of Russian companies in the development of the Orinoco fields. However, right now, this heavy and highly viscous oil that the fields have produced remains unsold, as buyers have become hesitant toward purchasing sanctioned oil. Over 8 billion barrels of crude oil are now stored in offshore oil tankers, as the onshore oil terminals are full. If the situation is not improved, we can expect Russian companies in Venezuela to report serious problems.

Moreover, these problems are already there. The excess of Venezuela’s oil supply has slowed down work on the Orinoco Belt, including projects for modernizing production facilities – projects which Rosneft is conducting in a joint venture with PDVSA. Rosneft has a share in five joint ventures: PetroVictoria, Petromiranda, Petromonagas, Boqueron, and Petroperija. The international rating agency Moody’s said the US sanctions against PDVSA would limit the financial and operational flexibility of Rosneft’s joint ventures in Venezuela since PDVSA owns more than 50% of each one of them.

As is known, Washington has posed large-scale sanctions against PDVSA designed to limit the export of Venezuelan oil and to force President Nicholas Maduro to resign. Russia is among the countries that continue to support Maduro. Over the past few years, the Russian Federation has become Venezuela’s last resort in terms of lenders. According to Reuters estimates, the Russian government and state-owned Rosneft have lent Venezuela at least $17 billion since 2006. Dmitry Peskov, Spokesman for the Russian President, said on March 1 that no negotiations on new financial support for Venezuela were being conducted at the presidential level, but Russia continued to maintain contacts with its partners in Venezuela.

“We are interested in continuing cooperation with Venezuela — especially as a number of our companies are running fairly large projects there. We hope that these projects have good potential, that they will have the potential for expansion, and of course, we wish the Venezuelan partners to cope with the difficulties they are facing, both political and economic ones, as soon as possible,” Peskov told reporters.

 

 

 

 

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