Russia’s Rosneft lends support to Venezuelan oil company PDVSA

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.