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The Fear Factor Is Back For Oil

The Fear Factor Is Back For Oil

While fundamentals suggest lower oil…

Venezuela Sues Oil Traders For Corruption

Venezuela Maduro

Venezuela’s state oil company has filed a lawsuit against a Miami-based company, alleging it provided insider information to a number of large trading companies that made billions of dollars by buying oil products at below market prices.

The trader group is nothing if not impressive, including names such as Vitol, Trafigura, Glencore, Lukoil, and Colonial Oil. According to a lawyer for the Venezuelan company who spoke to Reuters, PDVSA is acting via an entity called PDBSA US Litigation Trust.

The move is part of a wider crackdown on corruption by the Caracas government, which has so far led to the imprisonment of tens of PDVSA employees, which critics, according to Reuters, have dismissed as score-settling by the ruling party rather than any attempt to deal with corruption.

“I think this lawsuit ... illustrates the extent to which PDVSA and the Republic of Venezuela are now prepared to go after corruption regardless of who the people involved are,” said the trust’s lawyer, David Boies, chairman of Boies Schiller Flexner, the firm representing the Venezuelan company.

Last November, President Maduro said that six Citgo executives—U.S. citizens—that Venezuela arrested as part of a corruption sweep will be tried as traitors. Five of these have are US citizens holding dual US/Venezuelan citizenship. The sixth, Pereira, has a permanent residency permit for the United States.

Related: The Only Oil Major Not Buying Into The Permian

The U.S. authorities have requested that its nationals be released, but Maduro refused, saying “These are people born in Venezuela, they’re Venezuelan and they’re going to be judged for being corrupt, thieving traitors.”

Meanwhile, workers are leaving the state oil company in droves. A January media report said as many as 10,000 had left the company in just one week because of low wages and, more importantly, the growing risk of a serious accident because there is no money for maintenance of the production equipment.

By Irina Slav for Oilprice.com

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