Russia's Rosneft Plans to Sell All Assets Related to Venezuela
Date : 03/28/2020
Source : Dow Jones News
MOSCOW -- In an unexpected move, Russian state oil giant Rosneft announced that it would halt all activities in Venezuela and sell all its assets related to activities in the country.
"Today, Rosneft entered into an agreement with a company 100% owned by the Government of the Russian Federation on the sale of shares and termination of its participation in all projects in Venezuela, including shares in the production enterprises of Petromonagas, Petroperija, Boqueron, Petromiranda and Petrovictoria, in oil-service enterprises and trading operations," the company said Saturday in a statement posted on its website.
Based on the agreement, all of Rosneft's assets and trading operations in and related to Venezuela would be sold, closed or liquidated, the company said.
Once the transaction is concluded, Rosneft would receive a package of its own shares in the amount of 9.6% as a settlement payment, the company added.
The Russian government confirmed that it had acquired assets from Rosneft, the official state news agency RIA Novosti reported.
The announcement comes less than three weeks after the Trump administration added a subsidiary of Rosneft, Geneva-based TNK Trading International SA, or TTI, to its financial blacklist for allegedly helping Venezuela sell its oil in violation of U.S. sanctions. That embargo followed Washington's decision in February to sanction Swiss-registered Rosneft Trading SA, warning that anyone caught doing business with Rosneft's subsidiary risks being sanctioned by the U.S.
The Obama administration first imposed sanctions on Rosneft and a slate of Russian businesses and officials in 2014 to put pressure on President Vladimir Putin and Ukrainian separatists to cease their military activity in eastern Ukraine, where a slow-burning conflict was triggered following Moscow's 2014 annexation of the Crimean Peninsula that was controlled by Kyiv.
The Trump administration has since been trying to curb the revenue from oil, gold and other sanctioned sectors that have been helping to keep Venezuelan President Nicolás Maduro in power. Mr. Putin vowed to back Mr. Maduro, a longtime ally, after Venezuelan parliament speaker Juan Guaidó declared himself interim president in January last year, drawing support from several Latin American countries and the U.S.
Relations between Moscow and Caracas date to 1857, when Russia recognized Venezuela's independence. Venezuela recognized Russia as the Soviet Union's successor in 1991 and five years later the two countries signed a treaty of friendship and cooperation.
In recent years, the two nations undertook joint trade and economic investment projects, mainly involving the development of oil-and-gas fields.
Rosnetft and state-owned Petróleos de Venezuela are implementing five oil projects in Venezuela with a total production of 9 million tons a year -- 7% of the country's total production, state-controlled news agency TASS reported last year. The fate of these projects were unclear following Saturday's announcement.
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