Page 5 - LatAmOil Week 18 2021

LatAmOil COMMENTARY LatAmOil

How likely is that to change in the near future? time being – especially since US refinery oper-
ators have responded to their loss of access to
Russian-Venezuelan co-operation Venezuelan feedstock by importing more Rus-
A little more than a month ago, there were signs sian crude.
that Russia might start exploring new opportu- For another, the Russian oil company can-
nities in Venezuela. not just pick up where it left off in Venezuela.
Those signs emerged during Russian Deputy The country’s oil infrastructure has deteriorated
Prime Minister Yuri Borisov’s visit to Caracas markedly in the last few years, partly because
on March 31. During that visit, Borisov and the PdVSA has a long-standing pattern of under-
delegation he was leading signed 12 agreements investment and partly because sanctions have
with the Venezuelan government. Those doc- severely limited PdVSA’s ability to obtain or pay
uments provided for the two sides to expand for the goods, services, equipment and technol-
co-operation on many fronts, including energy. ogy needed to keep its oil and gas infrastructure
It is not clear whether Moscow and Caracas in working order. As a result, Rosneft would
are looking at any specific initiatives. Rostec, a probably have to spend significant amounts of Venezuela
state-owned concern involved in technology money on infrastructure improvements before
and arms sales, did agree to work with PdVSA it could resume production. It may not be pre- would probably
on beefing up security measures at Venezuelan pared to do so without strong evidence that oil
oil facilities, including production sites, process- prices will remain at or above their current levels be receptive
ing units and pipelines. for some time.
Rosneft, however, did not take compa- to overtures
rable measures at the same time – at least not What next? from Rosneft,
openly. Venezuelan authorities would proba- In short, Rosneft is likely to continue keeping a
bly be receptive to overtures from the Russian low profile in Venezuela in the near term. It has especially in
major, especially in light of their recent attempts no compelling economic reasons to return to
to draw new oil investment into the country that country, and it does not appear to be ready light of recent
under a new “anti-blockade” law that promises to mount a public challenge to the US sanctions
confidentiality to companies that fear the con- regime. attempts to draw
sequences of teaming up with PdVSA. It is not Its Venezuelan portfolio is – technically, at new investment
certain, though, whether any such overtures least – now in the hands of another company,
have been made. and its wariness about re-entry may influence into the country
other Russian operators’ attitude about the
Barriers to Rosneft’s return South American state’s attractiveness.
And there may not be any, at least not in the That could change under certain circum-
near term. At this time, Rosneft does not have stances. If the Biden administration starts
any obvious economic incentives for returning easing sanctions on Venezuela, for example,
to Venezuela. Rosneft might return – and the Kremlin might
For one thing, the US sanctions regime is still give Russian oil companies a signal to follow its
firmly in place, even though one of its biggest lead. Alternatively, if Russia’s government makes
backers, former President Donald Trump, is relations with Caracas a high strategic priority,
no longer in office. Trump’s election loss to Joe Russian investors may come under pressure to
Biden has generated some speculation about commit to Venezuelan investment projects.
the possibility that Washington might lift some For the time being, though, little is likely to
barriers to collaboration with PdVSA and its change. Rosneft and the Russian government
backers in Caracas, but so far that has not hap- will probably continue to provide PdVSA with
pened. And it may not happen any time soon, some degree of behind-the-scenes support,
since the Biden administration sees Venezuela along the lines of what they have been doing to
as a much lower priority than domestic issues. facilitate Venezuelan oil exports. But the com-
As such, Rosneft is probably keen to continue pany does not appear to be ready to take an
maintaining a low profile in that country for the active approach in Venezuela yet. ™

Week 18 06•May•2021 www. NEWSBASE .com P5