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Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount

Venezuela

An obscure Dutch firm will manage the Junin 10 oil block in the Orinoco Belt region, according to a new announcement from a struggling Venezuela.

A new Reuters report says the deal was made on Thursday, giving Stichting Administratiekantoor Inversiones Petroleras Iberoamericanas a 40-percent stake in the block via a joint venture called Petrosur.

PDVSA, a state-run giant, says the block could produce up to 200,000 barrels per day once fully developed. Both Statoil and Total have offered to work on the block before, but PDVSA has refused their offers.

PDVSA leadership has bypassed a required vote in the National Assembly to approve the deal. The congress is controlled by forces opposed to President Nicolas Maduro’s regime, prompting the bypass.

Russia is throwing a lifeline to defaulting Venezuela after the two countries signed on Wednesday a deal to restructure $3.15 billion worth of Venezuelan debt owed to Moscow. News of the deal broke days after Maduro held meetings with creditors to refinance $60 billion in national debt.

Under the terms of the deal that Russia’s Finance Ministry announced today, Venezuela will be repaying the debt over the next ten years, of which the first six years include “minimal payments”.      

“The debt relief provided to the republic from the restructuring of its liabilities will allow funds to be allocated for the country’s economic development, to improve the debtor’s solvency and increase the chances of all creditors to recoup loans granted earlier to Venezuela,” the Russian ministry said.

Related: Houthi Rebels Threaten To Attack Saudi Oil Tankers

However, the deal doesn’t include funds that Venezuelan companies—including state oil firm PDVSA—have borrowed from Russia, Venezuelan Economy and Finance Minister Simon Zerpa said, as quoted by Reuters.

Russia, as well as China, are the main sources of funds for the Venezuelan regime now that the U.S. slapped a series of sanctions on Venezuela’s government and its oil company PDVSA, including on issuance of new debt.

By Zainab Calcuttawala for Oilprice.com

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