Rus­sia’s Ros­neft lends sup­port to Venezue­lan oil com­pany PDVSA

Muscat Daily - - BUSINESS -

Moscow, Rus­sia - Rus­sia’s largest oil com­pany dis­closed an­other ad­vance pay­ment to Venezuela’s state pro­ducer af­ter the US sanc­tioned Pres­i­dent Ni­co­las Maduro on Mon­day.

Ros­neft PJSC paid US$1.02bn to Petroleos de Venezuela SA (PDVSA) in April for fu­ture crude sup­plies, the state-run Rus­sian pro­ducer said in an earn­ings state­ment on Fri­day. That fol­lows ad­vance pay­ments of about US$1.5bn in 2016 and comes a day af­ter Ros­neft chief ex­ec­u­tive Igor Sechin pledged to stick with in­vest­ment plans in the cri­sis­torn Latin Amer­i­can na­tion.

The South Amer­i­can coun­try be­came Ros­neft’s largest source of crude out­side Rus­sia through deals with late presi- dent Hugo Chavez and af­ter it ac­quired shares in Venezue­lan pro­duc­ers, led by PDVSA, as part of its pur­chase of TNK-BP in 2013. Bets on a Venezuela de­fault are climb­ing as po­lit­i­cal tur­moil in the oil-de­pen­dent na­tion com­pounds a crude price crash and de­clin­ing pro­duc­tion.

“This is an in­di­rect way of pro­vid­ing some fi­nan­cial aid to PDVSA,” ac­cord­ing to Ovanes Ogan­isian, a strate­gist at MidLin­coln Re­search, a con­sult­ing firm in Moscow. “PDVSA bonds are trad­ing now with yields in­di­cat­ing a very solid pos­si­bil­ity of de­fault.”

Ros­neft holds a 49.9 per cent stake in PDVSA’s US sub­sidiary, Citgo, as col­lat­eral for the US$1.5bn loan last year.

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