Russia has emerged as an unlikely player in the ongoing crisis in Venezuela; Moscow has a financial interest in the fate of the nation of 32 million. In the past week, the Kremlin has announced it is open to bilateral talks with the United States to resolve the crisis. While the Venezuelan government used force to prevent humanitarian aid from the United States, it announced it had accepted humanitarian aid from the Russian Federation. Russia’s Energy Minister Alexander Novak said last month that there has been no negative impact to Russia’s oil assets in Venezuela since the start of Venezuela’s constitutional crisis. Indeed Russia may be benefitting from the Trump sanctions, with a billion dollars worth of oil in storage and Venezuelan oil exports having dropped 40% since the Trump administration imposed sanctions. The Miami Herald is reporting that during that same period Russia exported 3 million barrels of oil to the United States spread across nine shipments.
Those barrels aren’t the only ways that Russian-Venezuelan ties complicate the U.S. energy market. Late last year Venezuela signed over 49.9 percent of Citgo (which it had previously owned largely in its entirety) to Russsia’s state-owned Rosneft oil company for a reported $1.5 billion in desperately needed cash. Citgo operates three pipelines in the United States and a web of pipelines that supply energy across the country. “U.S. sanctions could lead to new declines and complicate Russian ties to CITGO from a legal perspective,” says Tim Samples a Latin American oil expert and professor with the University of Georgia, “Russia was acting as lender of last resort and sometimes you can demand exuberant terms of the debtor …some Citigo assets could end up in default, and that would have very interesting implication under U.S. bankruptcy law. Rosneft could be entitled to seize some of Citgo’s assets, but it is unclear how such a scenario would unfold; the idea that Russia would be allowed to seize these assets would be unlikely. “Would an American regulator allow an adversarial foreign government to take possession of these assets? That is just some of the questions that remain unanswered as the U.S. imposes sanctions,” Samples said.
With the exception of Iran, Venezuela is Russia’s best friend in the Organization of Oil Exporting Countries (OPEC). Russia, despite being one of the world’s largest oil exporters is not a member of OPEC, but certainly enjoys having friends in its Vienna, its Austria headquarters. Russia has also made a number of key armament sales to Venezuela and as previously reported by Tzarism allegedly plans to open a military base in the country. Russia has also vowed to defend Venezuela from the United States. While the two countries have a number of defense agreements, there is no formal defense treaty.
Last week following a meeting between beleaguered Venezuelan leader Nicolas Maduro and Russian President Vladimir Putin, Venezuela announced that it would move the headquarters of its national oil company, PDVSA from Lisbon, Portugal to Moscow, Russia. This is the most visible sign of Russia’s growing influence in the Venezuelan petroleum industry.
“President Nicolas Maduro instructed the Lisbon branch of PDVSA to close this office and relocate the office to Moscow,” said Venezuela’s Executive Vice President Delcy Rodriguez.
Venezuela, not Russia or Saudi Arabia, is home to the world’s largest oil reserves. However, while Saudi Arabia was blessed with light and sweet crude that is easy to process, the Venezuelan stuff is a completely different viscosity and is often classified as ultra-heavy. The U.S. ban on dilutents used to (literally) get the Venezuela’s heavy crude oil flowing has also had a direct impact on Venezuela’s oil trade. Here again Russia is playing a role – a large shipment of the chemicals is already on its way.
..Last week following a meeting between ‘beleaguered’ Venezuelan leader Nicolas Maduro ”.. only in the warped eyes of exceptional Murikan journos.. also upset that Russia and China have given the finger to Murika with its idiotic sanctions..