Venezuela's President Nicolas Maduro has declared emergency for the country's oil industry, calling for measures to ensure Venezuela's energy security, Sputnik reports, quoting a tweet by the presidential administration.
"I declare an emergency situation in the oil industry by constitutional and presidential decree in order to take urgent and necessary measures to ensure the country's energy security and protect the industry from imperialist aggression," Maduro said.
"Clause 2 creates a plenipotentiary presidential commission for the protection, restructuring and reorganization of the national oil industry".
Reuters quoted Maduro as saying, "The sanctions, the blockade - I will not accept any more excuses. I am signing a decree to declare an energy emergency in the hydrocarbons industry in order to adapt necessary and urgent measures to guarantee national energy security and protect the industry from imperialist aggression."
The declaration comes a day after Washington slapped sanctions on a Rosneft trading unit for doing business with the Maduro government, which the United States has declared illegitimate.
"Today we sanctioned Russian-owned oil firm Rosneft Trading S.A., cutting off Maduro's main lifeline to evade our sanctions on the Venezuelan oil sector. Those who prop up the corrupt regime and enable its repression of the Venezuelan people will be held accountable," Secretary of State Mike Pompeo said in a tweet.
Related: Oil Prices Slump On Renewed Coronavirus Concerns
Rosneft, however, said it will continue doing business with Venezuela.
"The work [with Venezuela] consists solely in ensuring that previously made payments are repaid," Rosneft's vice president for commerce and logistics said as quoted by the Financial Times. "Repayments from Venezuela are working fully according to schedule and we will not disclose any more details."
Interestingly, it seems that part of PDVSA's attempts to manage the crisis involves ceding control of oil fields to foreign companies. Earlier this month, the New York Times reported that the day-to-day operations of oil fields are being entrusted entirely to the foreign partners in PDVSA's joint ventures.
The report cited industry insiders who said the foreign operators are taking care of everything from production, export arrangement, and even field security, with one source calling it a "stealth privatization".
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
It transpires that his measures amount to entrusting entirely day-to-day operations of oil fields to the foreign partners in PDVSA’s joint ventures. Among the major beneficiaries of such measures will be US oil giant Chevron and Russia’s largest oil company Rosneft. Both companies have successfully managed to raise Venezuela’ oil production in spite of the sanctions.
While the United States recently granted a sanction waiver to Chevron to continue operating in Venezuela and helping PDVSA raise its oil production, it slapped sanctions on a Rosneft or doing exactly the same.
Still, US sanctions will neither deter Rosneft nor Russia from supporting Venezuela and helping its economy and oil industry.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London