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“Of Course Not”: Venezuela Slams Russian Takeover Rumors

Russian Takeover Rumors

Venezuela will not hand over control of its cash-strapped state oil firm PDVSA to Russian oil giant Rosneft, a close aide to Nicolas Maduro told Russian news agency RIA Novosti, dismissing such reports as false.

“No, of course not,” Maduro’s close advisor Diosdado Cabello said, when asked could PDVSA be handed over to Rosneft.  

Venezuela has good relations with Rosneft and excellent relations with Russia, Cabello said. Vladimir Putin and Rosneft’s CEO Igor Sechin are Venezuela’s best friends, Cabello said, but dismissed reports that the country sitting on top of the world’s largest oil reserves is preparing to cede control over its state oil firm to the largest Russian oil company.

The Venezuelan government is readying to hand over control over state oil company PDVSA to Rosneft, a Venezuelan newspaper reported earlier this week, citing sources from the industry.

The radical move was supposedly being discussed as a way of erasing Caracas’ debt to Moscow, Russian news agency TASS reports, quoting El Nacional. The debt is sizeable: at the end of June this year, money owed to Rosneft alone stood at US$1.1 billion. That’s down from US$1.8 billion at end-March.

Two years ago, Caracas and Moscow sealed a deal for the restructuring of another US$3.15 billion debt to Russia over 10 years with minimum payments over the first six years. Since 2006, Russian loans to Venezuela have reached more than US$17 billion in total.

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According to the El Nacional report, Moscow had reacted positively to the suggestion, and several commissions had been set up and sent to Venezuela to evaluate the situation at PDVSA. The first feedback from these commissions was reportedly that the company was too large and it needed serious layoffs to become more competitive.

Caracas reportedly wants to hand control over to Rosneft without having to go through privatization. In any case, a change of ownership over PDVSA would need to be approved by the National Assembly, which is controlled by the opposition.

By Tsvetana Paraskova for Oilprice.com

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