Crackdown on Venezuela proves tricky

Oil ban may lead to takeover of Houston-based Citgo by Russia

WASHINGTON — In advance of a July 30 vote that could strip Venezuelan lawmakers of their constitutional power, Cuban-American politicians are going after Venezuela’ s jugular: the largest proven oil reserves in the world.

Over the past few weeks, as the tough talk on Venezuela reaches a fever pitch, South Florida lawmakers are uniformly behind a ban on Venezuelan oil imports to the United States, a drastic step that could deal a critical blow to Venezuela’s slumping oil industry.

The lawmakers seem convinced that the White House will do something drastic, going beyond the long-used tactic of issuing sanctions on individual Venezuelan government officials suspected of money laundering and drug trafficking.

“If this happens on July 30, I am convinced without any doubt that the president of the United States will act swiftly and decisively to ensure that there will be measures taken against individuals and potentially sectors for the unconstitutional overthrow of democracy and the replacement with a Cuban-style regime,” Sen. Marco Rubio, R-Fla., said Wednesday.

For now, Congress is united in its disgust toward Venezuelan President Nicolas Maduro, but some lawmakers — even among Republicans — disagree over how far the U.S. should go if Maduro’s constituent assembly comes up for its scheduled vote.

The Cuban-Americans favor a ban on Venezuelan oil imports, a far-reaching action that could further cripple an economy already mired in hyperinflation.

Venezuela exported 291 million barrels of oil and oil products to the United States in 2016. The United States buys nearly half of Venezuela’ s oil, and oil revenues account for 95 percent of Venezuela’s export earnings, according to OPEC.

In contrast, Venezuelan oil accounts for just 8 percent of U.S oil imports, according to the U.S. Energy Information Administration.

Lawmakers also are worried about the potential for a Russian takeover of Houston-based oil refiner Citgo, a subsidiary of Venezuela’s state-owned oil company, Petroleos de Venezuela, S.A., known as PDVSA.

A Russian state-owned oil company, Rosneft, acquired a 49.9 percent stake in Citgo as collateral for a $1.5 billion loan. If the Venezuelan government needs cash, it could hand over their oil assets, including Citgo, to the Russians.

“There’ s already been one default on a loan from Russia to Venezuela,” said Sen. Bob Menendez, D-N.J, a Cuban-American lawmaker who supports tough sanctions against Venezuela. “If in fact that default or any others is used by Rosneft to get the majority of shareholding of PDVSA … we could have a extensive energy infrastructure here in the United States owned by the Russian government.”

But the take over could violate existing U.S. sanctions on Rosneft put in place in 2014 as away to punish Russiafor its actions in Ukraine.

Reuters reported Thursday that Rosneft is negotiating a swap of its collateral in Cit go in exchange for oil field stakes and fuel supplies as a way to wiggle out of existing U.S. sanctions. Citgo’s U.S. energy assets include three oil refineries, nine pipelines and dozens of petroleum platforms.