What’s Next For Venezuela After Another Major Oil Corruption Scandal?

On March 20th, Tarek Al Aissami, Venezuela's former Oil Minister, announced his resignation amidst a large corruption scandal at the state oil company PDVSA. The scandal involved the disappearance of 3 billion dollars, which was connected to the sale of oil cargoes and connected with the crypto system. This led to the detention of Joselit Ramirez, the top official of the official cryptocurrency mechanism called SUNACRIP, who was known to be close to Tarek Al Aissami. In a rare move, Al Aissami resigned to President Maduro, which gave way for an extensive investigation, resulting in the arrest of other PDVSA authorities associated with the trading department. The investigation came at a time when 21 billion dollars in unpaid bills to PDVSA from sales via intermediaries were reported in 2020 due to sanctions against PDVSA.

This new chapter is significant given the political and macroeconomic context of Venezuela, which is preparing for presidential elections in 2024, considering also the key importance of Tarek Al Aissami in the upper political and economic circle of the government. Closely watched by the U.S., Al Aissami was known to be the key connection with Iran and the all too powerful Arab economic lobby in the country which got access to lucrative multi-million dollar deals in the last couple of years.

Meanwhile, this move could highlight political clashes between different factions within the Maduro government and is a possible signal to Washington by the moderate faction in the Venezuelan government, which has been looking to get sanctions lifted. Recently, the U.S. extended a sanctions waiver for Chevron, which currently is the only Western oil major operating in Venezuela. 

Following the resignation of Al Aissami, President Maduro has appointed Pedro Telechea, the recently installed President of PDVSA, as the new Oil Minister. The new Minister has to deal with a corruption case within the oil company that will further harm its reputation. It remains to be seen what strategic direction Venezuela will take regarding its alliances with Moscow, Iran, and Beijing, or whether it will return to its traditional alliance with the US. Given the current circumstances of global oil markets, with Russia's oil exports under sanctions and Venezuela's proximity to the U.S., it would be wise for Venezuela to consider re-establishing its former relationship with Washington, which has been its natural crude export market for decades. Additionally, strained relations between Washington and traditional Gulf allies such as Saudi Arabia could increase the value of Venezuelan oil to U.S. refiners.

The investigation into the corruption case has only just started, and with speculation rife about the real motivation behind the resignation of former Minister Tarek Al Aissami, there are clear signals that Washington may have been behind this action in order to consider expanding its oil presence in Venezuela. After all, a change of winds in Venezuela’s oil patch could benefit the U.S. at a time when OPEC+ is further tightening the market through supply cuts.

By Jose Chalhoub for Oilprice.com

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