Russia prepares to kiss goodbye to multi-billion investments in Venezuela

The US sanctions on PDVSA, the Venezuelan state-owned oil company, threaten to affect the Maduro government’s ability to repay its debts to Russia, Russian Deputy Finance Minister Sergey Storchak said on Tuesday. 

According to Storchak, Venezuela has borrowed more than $3 billion from Russia in intergovernmental loans. 

The debt had to be restructured in November 2017, when the repayment schedule became impossible for Nicolás Maduro, whose 6 year rule has seen the Venezuelan economy shrink by 33%, bringing the country of 30 million inhabitants to the verge of mass starvation. 

“There will probably be problems,” Storchak admitted, “Everything now will depend on the army, the soldiers, and how faithful they are to their duty and oath.” 

“Any other assessment is difficult, even impossible to give,” TASS cites the deputy finance minister as saying. 

According to him, Venezuela is currently still in a concessionary period with respect to its government debt to Russia, but the next $100 million payment is due in March. 

Venezuela paid its last tranche of the same amount in September. “The upcoming payment is the same. We have a fixed interest rate. When the time comes to return the loan, alongside the interest, part of the debt is repaid. This is the classic government debt repayment scheme,” the deputy finance minister explained. 

However, intergovernmental loans are only the tip of the multi-billion dollar iceberg of Russia’s investments in Venezuela, which President Vladimir Putin claims help Russia’s efforts to build a multipolar world. 

According to Reuters’ calculation, Moscow has invested a total of $17 billion in the Latin American country since 2006. 

Venezuela owes the Russian oil company Rosneft around $3.5 billion, observes Georgy Vashchenko, head of stock market operations at the Freedom Finance investment company. Though the money was given as a prepayment for Venezuelan oil, it is effectively a loan, with PDVSA’s future oil extractions as the collateral. 

As a result of the US sanctions, which have cut the Venezuelan company off from exporting oil to the US, Rosneft risks losing all these funds, Vashchenko notes. 

The Russian state-owned bank Gazprombank has invested another $150 million in Venezuela: the credit line was issued to a joint enterprise that was organized by PDVSA and one of the bank’s subsidiaries, Gazprombank Latin America Ventures B.V., which is registered in the Netherlands. 

It has invested in projects to develop to Venezuelan oil fields – Lagunillas Tierra and Bachaquero Tierra. 

Just like the loans issued by Rosneft to PDVSA, Gazprombank’s loans are secured by means of oil shipments. This “minimizes the risk,” a source close to the bank told TASS last week. 

Russian Foreign Minister Sergey Lavrov said on Tuesday that Russia will do everything it can to support Nicolas Maduro’s government, which Russia calls Venezuela’s “legitimate government”. 

“We understand that the US has, simply put, taken the bit in its teeth, and publicly adopted a course to illegally change the regime. Nevertheless, this does not abolish the need to stand up for international law through all the available means,” he emphasized.


  Russia, Venezuela, Maduro, Lavrov, USA