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Rosneft’s chief executive, Igor Sechin, last week flew to Caracas to have words with President Maduro regarding delays in the shipments of Venezuelan crude that Caracas had agreed to send to Russia as a repayment for cash, Reuters reports, citing sources close to the talks.
“He brought information showing that they were meeting obligations with China but not with them,” one of the sources told Reuters. “They’re running around in PDVSA because of this.”
What’s more, another source said the Russian delegation was not the only one visiting Caracas: a Chinese delegation was also there.
Russia and China are pretty much the only countries left that are willing to lend Caracas a hand amid U.S. sanctions and falling oil production that have combined to create a severe economic crisis. China is the bigger benefactor, having poured as much as US$50 billion into Venezuela since its troubles began, which could explain why Caracas is giving priority to shipments to China.
Yet Russia has also been generous: Reuters has calculated that Moscow has lent Caracas some US$17 billion since 2006. What’s more, Rosneft has an option to purchase a majority stake in the crown jewel of PDVSA, Citgo, which the Venezuelan company used as collateral for one of the latest loans granted by the Russian company.
More Reuters calculations show that PDVSA has been falling behind in its shipments to China as well. At an average daily rate of shipments at 463,500 for the period between January and August, PDVSA was about 60 percent compliant with the terms of its contracts. Daily shipments to Russia averaged 176,680 bpd over the same eight-month period, which constituted a compliance rate of 40 percent, Reuters noted.
Meanwhile, oil production in Venezuela is falling relentlessly. Over the past 12 months, it shed 37 percent and now stands at 1.17 million barrels daily.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.