Venezuela offers to give Russian oil giant Rosneft control over PDVSA

The Venezuelan government is considering handing over complete control of the state-owned oil company Petróleos de Venezuela S.A. (PDVSA) to the Russian oil corporation Rosneft, the Venezuelan newspaper El Nacional reported, citing sources in the country’s energy sector.

According to the news outlet, the Venezuelan government proposed this initiative in exchange for writing off the country’s debt to Russia. Moscow apparently viewed the initiative positively, because it sent several commissions to Caracas to assess the situation within the PDVSA and the viability of the agreement. According to Nacional’s sources, the Russian specialists concluded that significant layoffs would be needed in order to make the company competitive again.

The Venezuelan authorities are currently looking for a legal way to give Rosneft control over the PDVSA without resorting to privatization, which would require the approval of the opposition-controlled National Assembly (Venezuela’s unicameral parliament).

In January 2019, the US imposed sanctions on the PDVSA in connection with the political crisis in Venezuela. Washington also froze $7 billion of the company’s assets. The US has said that it will only ease the restrictions on the company if control of it is given to the Venezuelan opposition.

Rosneft has been one of the biggest investors in Venezuela. The Russian company is working on a number of joint oil exploration and extraction projects with the PDVSA. According to Rosneft’s assessments, the geological reserves of these projects contain in the region of 20.5 billion tons of oil. The companies also jointly own the oil-servicing company Perforosven.

On September 10, US Special Representative for Venezuela Elliott Abrams said that the US plans to impose sanctions on Rosneft for collaborating with Venezuela, but is not yet ready to do so. Abrams had said previously that Rosneft’s activity in Venezuela does not contravene the US’s sanctions on the country.

As reported previously, in November 2017, Russia and Venezuela signed an intergovernmental protocol to restructure $3.15 billion of Venezuela’s debt over a 10 year period with minimal payments for the first six years. Payments were expected to be made twice a year – in March and September.

  Rosneft, PDVSA, Venezuela, Maduro