In its annual IFRS report and presentation on Tuesday, the Russian energy company Rosneft reported that it has a total of $4.4 billion invested in the Venezuelan economy as of the start of 2019.
$2.3 billion, more than half of the total, is in the form of loans to the Venezuelan state-owned oil company PDVSA, which have been issued since 2014 as prepayments for oil.
PDVSA has received a total of roughly $6.5 billion from Rosneft, although two thirds of this debt has already been paid off. Last year it repaid $2.3 billion in four tranches - $600 million in the first quarter, $400 million in the second, $500 million in the third and $800 in the fourth.
In addition, Rosneft invested $2.1 in Venezuela directly, buying shares in the country’s oil extraction projects.
The Russian company assessed three such joint ventures with PDVSA as having a total book value of 138 billion rubles ($2.1 billion): 40% in Petromongas (77 billion rubles), 40% in Petrovictoria (31 billion rubles) and 32% in Junin-6 (30 billion rubles).
For two other projects, Boqueron and Petroperija, of which Rosneft owns 27% and 40% respectively, the company reported an unrecognized share of loss of 10 billion rubles ($152 million).
If the political crisis in Venezuela continues, Rosneft’s losses could increase significantly.
Venezuelan opposition leader Juan Guaidó recently declared himself interim president of the country, and has managed to secure the support of the US, EU, Canada and 11 of the 14 Latin American countries in the Lima Group.
“If the political regime changes, the Russian company risks losing all investments in the problematic Latin American country,” observes Alpari analyst Alexander Razuvaev.
Rosneft’s commercial relations with PDVSA are based on active contracts and comply with the standards of international and local legislation, the company stated in the report.
When asked about the company’s losses in an interview with Govorit Moskva radio on 24 January, Rosneft spokesperson Mikhail Leontyev responded: “What reason do we have to comment? What losses? Nothing has happened there. Everything that is going on there has been happening for five years already, every day. There’s a pretty big mess in Venezuela. We are not getting involved in politics, you mustn’t expect a comment from us. Are you out of your mind?”