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Rosneft Slumps On Possible US Sanctions Over Venezuela Ties

Shares in Russia’s largest oil producer, Rosneft, slumped on Friday on the Moscow Stock Exchange, following a report on Thursday that the United States is thinking about slapping sanctions on the Russian oil giant for keeping business ties with the regime of Venezuela’s Nicolas Maduro.

Rosneft’s shares opened sharply down on Friday and were losing 5 percent in the early afternoon, before erasing some of the losses to trade down 3.41 percent at 5:13 p.m. Moscow time.

The share decline today was the sharpest one-day drop in nearly two years, since April 2018.

On Thursday, Bloomberg reported, quoting people familiar with the issue, that the United States is considering whether to sanction Rosneft over its continued business with Nicolas Maduro’s regime. The U.S. administration, however, is concerned that sanctions on Rosneft—a key trading partner for Venezuelan oil—would create chaos on the market and push oil prices up, according to Bloomberg’s sources.

Rosneft has four joint ventures with PDVSA that produce oil and it also became the largest receiver of Venezuelan crude oil last year: the Russian company sold the oil on behalf of PDVSA and kept the proceeds as payment on billions of dollars in loans to the embattled Venezuelan company.

Earlier this week, a senior U.S. administration official said that the Trump administration is keeping a close eye on companies that are still doing business with Venezuela and is ready to mount pressure on them, up to and including sanctioning them.

Last October, Elliott Abrams, U.S. Special Representative for Venezuela, told the Financial Times that Russia’s Rosneft is “really central to the regime’s survival,” because it buys the oil Venezuela produces and helps it sell the oil and arrange the financing. The U.S. Administration is thinking about slapping sanctions on Rosneft, but it hasn’t done it yet, as it is looking at a broader context in the relations with Russia, Abrams told FT.

The interview drew a reaction from Rosneft, which said in a statement that the U.S. is hypocritical in its selective sanctions and sanction waivers against Venezuela as it grants American and pro-American companies extensions of licenses to operate in Venezuela.

“Thus, USA officials demonstrate hypocrisy by selectively - in violation of international law - granting advantages to “their” companies to the detriment of competitors,” Rosneft said last October.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on February 07 2020 said:
    Despite intrusive US sanctions, Russia and China are not only keeping Venezuela’s economy afloat but are also helping Venezuela increase its crude oil and products production and market its oil and get paid.

    Rosneft has been receiving Venezuelan crude oil as a repayment for the loans it has extended in the past to Venezuela and selling the oil around the world with some Venezuelan crude finding its way to American refineries.

    And while the United States is reported to be considering slapping some sanctions on Rosneft, it has had no hesitation in granting a sanction waiver to the US oil company Chevron to continue operating in Venezuela probably to keep its oil industry functioning until installing its puppet Juan Guaido as president of Venezuela.

    There will be no regime change in Venezuela because the people of Venezuela will neither accept a puppet imposed on them nor US interference in their affairs.

    Any US sanctions against Rosneft will not fare better than the ones that have been imposed on Russia since 2014. And despite all the plotting, sanctions and also the threat of sanctions against Germany, Nord Stream 2 gas pipeline will be completed in a few months’ time and will be a symbol of German and Russian defiance of America.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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