Venezuelan State-owned oil company PDVSA has reduced production and exports since the U.S. government-imposed sanctions. The company, however, has managed to keep some of its main clients with the help of Russian oil company Rosneft, which has become the main trader of PDVSA’s oil.
Claudio Loser, former director of the International Monetary Fund’s Western Hemisphere Department, said that Rosneft “is the intermediary,” highlighting its importance in Venezuela’s crude oil sales strategy.
In July, direct oil imports from Venezuela to China and India fell sharply, — 40 and 20 percent respectively. At the same time, Russian oil company Rosneft increased its purchase and became the main consumer of Venezuelan oil, taking 66 percent of the country’s oil exports in August, according to news agency Reuters.
“Rosneft can buy oil from Venezuela and say we consume this and sell the rest to other countries,” Loser said.
Loser told Voice of America that Rosneft’s intermediation has enabled PDVSA to keep some of its traditional clients in China and India, who fear becoming the targets of U.S. sanctions.
Lisa Viscidi, director of the Inter-American Dialogue’s Energy, Climate Change and Extractive Industries Program, said that it’s difficult to trace the operations involving Venezuelan oil. “They are trying to conceal the transactions. For instance, it’s been reported that ships navigate without lights so satellites can’t catch them,” Viscidi said in an interview with Voice of America’s Venezuela 360 program.
Although PDVSA has been able to maintain some of its exports, Viscidi said that crude oil production in October could plummet further if the U.S. government doesn’t renew permits for U.S. companies that operate oil wells in Venezuela in partnership with PDVSA. Chevron, the most important of these companies, is involved in the production of 181,000 barrels a day.
“If Chevron has to leave the country, things will get more complicated for Venezuela, because in general, the projects that do best, those with the most production, are operated by foreign companies,” Viscidi said.
According to Loser, the exit of PDVSA’s U.S. partners from Venezuela would greatly impact the influx of Venezuelan migrants in the region. “Obviously, this will affect the government’s capability to grant subsidies. This would have a direct impact on Venezuelans’ tendency to emigrate,” Loser said.
Viscidi and Loser agree that PDVSA’s oil production won’t disappear completely, but they believe it is entering a survival stage.
“That’s what we saw in Iran; they will continue to export at much lower levels than before,” Loser said.
Until 1999, Venezuelan oil accounted for 72 percent of the country’s exports, but in recent years as the nation’s industrial sector collapsed, oil dependency increased 90 percent, paradoxically with the lowest production levels since 1940.