Venezuela Shifts Oil Accounts to Russian Banks

Venezuela Shifts

As per sources and internal documents, Venezuela’s state-owned oil company PDVSA is telling customers of its joint ventures to deposit sales proceeds from oil in a recently opened account at Russia’s Gazprombank AO.

PDVSA’s instruction is followed by the United States’ fresh sanctions on January 28. These sanctions aim to block Venezuela’s President Nicolas Maduro’s access to the country’s oil revenue.

Supporters of Venezuelan leader of the opposition who became the interim president after self-proclamation, Juan Guaido said that a fund would be created to accept proceeds from sales of Venezuelan oil very soon.

After the much-talked election irregularities and series of charges of malpractice on Juan Guaido, many countries including the United States have recognized Guaido as the nation’s legitimate head of state. Maduro has, however, denounced Guaido as a puppet of the United States and alleged him of trying to initiate a coup.

According to the sources, PDVSA has also started pressing its foreign partners holding stakes in joint ventures in its key Orinoco Belt producing area to decide whether they will continue with the projects formally.

The partners in the joint venture are Norway’s Equinor ASA, U.S.-based Chevron Corp, and France’s Total SA.

PDVSA’s finance vice president, Fernando De Quintal, in a letter dated February 8 to the PDVSA unit that supervises its joint ventures wrote, “We would like to make formal your knowledge of new banking instructions to make payments in the United States dollars or euros.”

It should be reported here, even after the sanctions of 2017, PDVSA’s joint ventures managed to maintain bank accounts in the United States as well as in Europe to receive proceeds from oil sales. They also used the banks in the United States and Europe to transfer money to PDVSA’s accounts in China.

PDVSA several weeks ago have issued instructions of the new banking systems to all its customers. It has also started moving the accounts of its joint ventures, which can export crude separately. The decision has been made along with tension as some of its partners, which have withdrawn staff from Caracas since U.S. sanctions were imposed in January.

The Sanction by the U.S. Government has given a deadline to stop all operations in the South American country. The companies include Chevron and oil service firms Halliburton Co, General Electric Co’s Baker Hughes and Schlumberger NV.

As per the reports, the European Union has encouraged its member countries to recognize a new temporary government led by Guaido until new elections can be held. Europe also has said the chances of imposing financial sanctions to bar Maduro from having access to oil revenue coming from the region was high.

Maduro has been alleged of an economic collapse in the oil-rich South American country that has left many Venezuelans malnourished and struggling to find medicine, sparking the exodus of an estimated 3 million Venezuelans.

Sanctions meant to deprive Maduro of oil revenue have left an armada of loaded oil tankers off Venezuela’s coasts that have not been discharged by PDVSA’s customers due to payment issues. The bottleneck created due to economic sanctions has created trouble for PDVSA to continue producing and refining oil without imported diluents and components.

PDVSA also ordered its Petrocedeno joint venture with Equinor and Total to stop extra-heavy oil output and upgrading, as there is a lack of naphtha needed to make the production exportable, as the sanctions prohibit U.S. suppliers of the fuel from exporting to Venezuela.

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