Rosneft closes in Venezuela: what is behind the surprise announcement of the Russian oil company

Rosneft sells everything in Venezuela.

The Russian oil company announced in a statement on Saturday the sale of all its assets and its participation in farms in the South American country to a company owned exclusively by the Russian government.

Rosneft sells everything in Venezuela. The Russian oil company announced in a statement on Saturday the sale of all its assets and its participation in farms in the South American country to a company owned exclusively by the Russian government.
Sechin, before Putin. The Rosneft director is one of the most trusted leaders for the Russian president.
In return, the company, which has both public and private capital, will receive 9.6% of its shares currently held by the Russian state.
The decision supposes, a priori to the end of all activities in Venezuelan territory of a company that has become, over the years, a key player in the geopolitical battle that the United States and Russia are waging around Venezuela.

Washington sanctioned the subsidiary Rosneft Trading last February after Rosneft ignored for months the previous sanctions against PDVSA, the Venezuelan state oil company, and continued exporting extracted oil in Venezuela.
The government of Vladimir Putin, the majority shareholder of Rosneft through a state company, is along with China, the main international support for Nicolás Maduro.
Instead, the United States considers Maduro a "dictator" and has spent years applying a policy of sanctions and pressure that seeks to force his departure from power. In January 2019, USA recognized the opposition leader, Juan Guaidó, as interim president of Venezuela, a step followed later by most countries of the European Union and Latin America.
This Thursday, the United States Attorney General announced the formal accusation in the courts of his country of Nicolás Maduro for drug trafficking, money laundering and possession of weapons. Washington offers a reward of US $ 15,000,000 for who facilitates the arrest of Maduro and other top Chavista leaders.

What is Rosneft and why it matters

Rosneft is an oil company owned majorly by the Russian state, which lists it as one of its "strategic companies".

Its executive director is Igor Sechin, who is considered one of the most trusted leaders of Vladimir Putin, a sign of the importance that the firm has for the Russian president.
Rosneft was present in Venezuela already in the times when Hugo Chávez was president.
And unlike other foreign energy companies, which were expropriated or left the country by their own decision, it maintained its activity and investments even in the face of the collapse of Venezuelan oil production in recent years.
The presence of the company has been, along with military cooperation and the sale of weapons and defense systems, one of the most visible elements of the Kremlin's policy of support for Maduro.

Until now, Rosneft had played a key role in the exploitation and distribution of crude in some of the most important fields in the country, such as Petromonagas, Boquerón, Petrojunín and Petrovictoria, in which it operates in collaboration with PDVSA.

What exactly does the ad mean

In the statement announcing its decision, Rosneft reported that it is taken for the benefit of its shareholders.
But doubts persist about the real scope of his announced withdrawal from Venezuela and how it will materialize.
The announcement of the sale of its assets in Venezuela to another company, this exclusive property of the Russian state, suggests that the Kremlin's commitment to Maduro is maintained, although it will now have a different appearance.
Francisco Monaldi, an expert in Energy Policy in Latin America at the Baker Institute analysis center, believes that "this allows Russia to continue helping Venezuela and at the same time leave Rosneft out and limit the cost of sanctions."
A source familiar with the Venezuelan oil sector who asked not to be identified told said that "the sanctions against Rosneft Trading were making the Russians unable to sell many of their regular clients, who were at risk of being sanctioned as well, and also the banks were not going to process the payments."

PDVSA has lost many of its business partners to the sanctions.

The oil business in Venezuela goes through critical moments.
In addition to the years of deterioration of PDVSA, the sustained drop in production and the impact of sanctions, now there is also that of the world economic crisis caused by the covid-19 pandemic, which has caused the price of a barrel of oil to fall by below US $ 30, even below its production costs, as Maduro himself admitted in a recent televised address.
The source consulted indicates that "with oil prices so low, maintaining an asset as toxic as Venezuela is right now could make it very expensive for Rosneft's private shareholders to continue in the country."

Rosneft closes, but Russia stays

The Russian state company Rosneft closes in Venezuela.
But his replacement will be taken by another even more state-owned company.
It is necessary to know many details to interpret the real intention of this unexpected business movement, apart from the many doubts that exist about its legality and technical feasibility.
But what was increasingly clear is that oil in Venezuela had long ago become more of a political issue than a business.
With oil prices so low and production on the verge of being paralyzed by the collapse of exports, rather than making money, for Russia it is about preserving its presence and influence.
Whatever the Russian state-owned company succeeds Rosneft, there is no indication that this will be change any time soon.

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