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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…

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Maduro: All Venezuelan Oil Will Be Sold In Petro Cryptocurrency

Maduro Petro

Venezuela’s President Nicolas Maduro said on state television that Venezuela would put in place in 2019 a program to sell all its oil production in the Petro cryptocurrency, which the leader is touting as the first state-backed oil-backed digital currency.

Gradually, Venezuela will sell all its oil production in Petro, Maduro said during a visit to Russia. For 2019, Venezuela will have a timetable to sell all its oil production in the cryptocurrency, its president said. In this way, Venezuela will free itself from the currency used by Washington “to create economic pain” to other countries, and to “persecute countries, as it does with Venezuela, Cuba, Iran, and Russia”, Maduro said.

El Petro, however, is seen by analysts and experts as nothing but a scam and another effort by Venezuela to skirt sanctions and mask the inability to overhaul the ailing domestic economy.

According to the International Monetary Fund (IMF), Venezuela’s economy will collapse by 18 percent this year, while inflation is expected to be at 1,370,000 percent.

Over the past months, Maduro has been touting a new plan for economic recovery, which includes a new policy on gasoline pricing that would raise Venezuela’s ultra-cheap gas prices for the first time in two decades. The plan to ease the severe economic crisis also featured a devaluation of the currency and pegging the new bolivars to the Petro.

Maduro claims that the Petro is strengthening his recently announced economic overhaul plan and will “revolutionize” the global crypto economy with a new form of trade, finance, and monetary exchange.

Experts and analysts are skeptical that the Venezuelan cryptocurrency is really backed by oil assets and minerals.

“Reaction from the cryptocurrency community has been a mixture of dumbfoundedness and anger,” Alex Tapscott from the Blockchain Research Institute told the BBC.

According to Tapscott, there isn’t any proof at all to back up Venezuela’s claim that each unit of the Petro is backed by oil.

By Tsvetana Paraskova for Oilprice.com

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  • Ricardo on December 10 2018 said:
    Few refineries can use Venezuelan crude oil. Most of them are on the Gulf Coast. They won't be buying. Canadian oil is a substitute.
  • S Holmes on December 08 2018 said:
    Maduro tried that trick this spring, offering India a 30% discount on oil price if India paid in Petro. India did not take the bait. This is understandable, if one takes the following into account:
    1) Although one Petro (according to Maduro) is worth the price of one barrel of Venezuelan oil (possibly around 50 US$ at current oil prices), it is in reality worthless; It can not be exchanged for any other currency, and it can't be used to pay for any goods on the open market, except for Venezuelan oil or Venezuelan taxes.
    2) The only seller of Petro is the Venezuelan government.
    3) There is in reality no financial separation between the Venezuela government and the Venezuelan state oil company (PdVSA).
    4) Due to a severe infrastructure collapse, Venezuela has large problems in pumping, refining and delivering oil, with delivered quantities decreasing each month.

    This means that if an international customer agrees to pay for e.g. one million barrels of Venezuelan oil with Petro, he has in reality paid for the oil when he exchanges his dollars, euros, rupees, yuan (or any other currency) for one million Petro (sold by the Venezuela government).
    If the oil delivery should run into difficulties or delays, which is very likely, the customer is stuck with one million Petro, which can not be used for anything.

    So buying Venezuelan oil with Petros, can well be like paying real money for nothing.
  • John Brown on December 07 2018 said:
    El Petro is a joke. Chavez & now Maduro are Communist tyrants that have destroyed the economy of Venezuela. Oil production is falling off a cliff. Maduro may claim oil & Gold backs el Petro but you’ll have to go to Venezuela yourself w a bucket & pick axe if you want to collect. Maduro will likely end up hanging from a lamppost by his heals if there is any Justice/Karma. Venezuela will only keep falling until he & the entire corrupt Chavista regime are gone. Hopefully sooner rather than later if more children are to survive.
  • Refman on December 07 2018 said:
    Looks like he will not be exporting any crude to the USA then
  • Jedidiah Craig on December 07 2018 said:
    Looks like Trump won't have to sanction their oil industry. Maduro is going to do it for him given the Petro is already sanctioned and no U.S. company can legally obtain them. For all his anti-American rhetoric America is still one of PDVSA biggest paying customers.
  • Forrest Fuego on December 07 2018 said:
    Paraskova still does not understand the difference between devaluation and redenomination.

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