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Trump’s White House will block attempts by the Kremlin to acquire large portions of Venezuela’s Citgo, a U.S. subsidiary of the state-owned PDVSA.
Rosneft agreed to acquire half of Citgo’s shares in exchange for a $1.5 billion loan in 2016. Cash-hungry PDVSA approved the deal, leaving American lawmakers concerned that a Russian firm would control roughly five percent of U.S. refining capacity via the buyouts.
Citgo controls three refineries which process 750,000 barrels of oil per day. It also owns 48 storage facilities for refined petroleum products across the country and shares ownership in nine pipelines.
The White House approved new sanctions against President Nicolas Maduro’s regime last week, making it harder for Venezuela’s embattled government to secure funds as Caracas spirals towards a default.
U.S. President Donald Trump signed the executive order, which prevents American financial institutions from offering new funds to Venezuela or to its state oil company, PDVSA. Citgo, will also be barred from repatriating profits – further isolating Caracas from international financial markets.
"These measures are carefully calibrated to deny the Maduro dictatorship a critical source of financing to maintain its illegitimate rule, protect the United States financial system from complicity in Venezuela's corruption and in the impoverishment of the Venezuelan people, and allow for humanitarian assistance," Washington said in a statement.
Related: Russian Energy Unaffected By U.S. Sanctions
A senior official from the White House told the AP that Maduro’s regime could be relieved of the sanctions if it halts its plans to rewrite the Venezuelan constitution, releases dozens of political prisoners, and negotiates fairly with its political opposition.
Venezuela is currently undergoing a humanitarian crisis with medications and daily supplies in scarcity. In its heyday, Caracas used oil revenues to import almost all staple and luxury goods for its citizens, but a severe shortage in funds due to three years of low oil prices has caused the shipments to stop. Instead, Venezuela opens its border with neighboring Colombia from time to time to allow citizens to purchase life-saving medical goods and other needed items.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…