Moscow Will Do “Whatever It Takes” To Defend Its Interests In Venezuela
After decrying US sanctions against Venezuela’s state-run oil company PDVSA as “illegal” and enforcing “unfair competition”, a Kremlin spokesman has reiterated that Russia is prepared to use “all mechanisms available to us” to defend its economic interests in Venezuela – interests that are closely tied to the Maduro regime.
According to RT, Russia has extended billions of dollars of loans to PDVSA, mostly via oil firm Rosneft. The company has extended $6 billion of loans which must be repaid in crude by the end of the year. Data from S&P Global Platts shows that as of November 2018, Venezuela had a $3.1 billion outstanding loan to repay to Rosneft.
Rosneft also has five joint upstream projects with PDVSA in Venezuela. Peskov said that Russia is still assessing the potential impact of the PDVSA sanctions for Moscow.
According to analysts briefed by Platts, whatever becomes of Maduro, Rosneft likely won’t be cut off from Venezuelan oil because the country has abundant reserves, and oil is practically the only ‘hard currency’ it can access. An analyst at a Western bank estimated that Rosneft assets in Venezuela are equivalent to some $2.5 billion, plus another $2.5 billion in crude supplies owed for the loans.
“The worst-case scenario – which is unlikely to materialize – under which Rosneft loses all the money it invested in Venezuela, would be biting but not critical for the company, with quarterly free cash flow at over $4 billion,” the analyst told Platts.
Meanwhile, the US has warned that the “path to relief” for PDVSA is via the “expeditious transfer of control” to opposition leader Juan Guaido, which the US insists should be followed by Democratic elections.
Though the Kremlin has denied the reports, rumors about the presence of 400 Kremlin affiliated mercenaries in Venezuela make more sense given how much money is at stake.
