Page 9 - LatAmOil Week 07 2020
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LatAmOil VENEZUELA LatAmOil
Caracas issued the statement a er the OPEC- plus group’s Joint Technical Committee (JTC) said that oil output should be shaved further over concerns about global crude demand owing to the coronavirus outbreak in China. e group, which includes OPEC’s 13 members along with Russia and other allies, agreed last year to keep an existing supply cuts in place until the end of February.
Ten members of OPEC – that is, all of the organisation’s member countries except for Ven- ezuela, Iran and Libya – agreed to those deeper cuts, which amounted to around 1.17mn bpd. As a result, OPEC saw output drop to 28.35mn bpd in January.
is was the lowest level recorded in more than a decade and was 640,000 bpd down on the gure reported for the previous month of
December.
Venezuela’s oil output has been falling
even more dramatically than it needs to under OPEC’s current quota regime. is is largely the result of the stricter sanctions imposed by the US government last year. e policy is designed to hit the country’s oil exports and put pressure on socialist President Nicolas Maduro to step down while backing an interim government led by opposition leader Juan Guaido.
ese trade restrictions have had a signi - cant impact, in that they brought Venezuela’s oil exports down by around a third last year to an average of 1mn bpd. ey e ectively prevented PdVSA from sending oil to some of its biggest long-time customers in the US; as a result, the state-owned company is now sending most of its oil exports to China and India.
US government sanctions Rosneft unit over ties to Venezuela
THE US Department of the Treasury’s O ce of Foreign Assets Control (OFAC) said last week that it had imposed sanctions on Rosne Trad- ing, the trading unit of the state-controlled Rus- sian oil major Rosne .
e department has also placed the com- pany’s vice president Didier Casimiro on the Specially Designated Nationals and Blocked Persons (SDN) list.
As reported elsewhere, Venezuela has been accused of secretly exporting millions of barrels of oil to Rosne . It is estimated that since 2006, Russia and Rosneft have granted Venezuela $17bn of loans, which is being repaid by state oil company PdVSA.
Earlier this month, Rosneft’s stock prices dipped following reports that the US was considering additional sanctions against the Russian oil giant for maintaining ties with Ven- ezuela. But the blocking sanctions do not apply to Rosne itself, and the OFAC gave a deadline of May 20 to counterparties to close operations with Rosne Trading.
“[The] business of the sanctioned trader accounts for just circa 1% of [Rosneft’s] EBITDA,” BCS Global Markets commented on February 19. It added that the trading business was not one of the top ve o -takers of oil from Rosne and was primarily engaged in buying oil from various supply sources, including Ven- ezuela, for resale to third parties.
“Still, Rosne may switch some USD based contracts to EUR and incorporate new trading entity, transferring all contracts to it,” BCS GM warned.
Given the amount of time remaining till the
deadline falls, though, analysts assume Rosne has enough time to settle all technical issues with trading to avoid any negative impact from the new sanctions.
“Therefore, new sanctions are unlikely to provide a signi cant negative impact on Ros- ne ,” BCS GM concluded.
The US is targeting Rosneft’s trading arm (Photo: Shutterstock)
Week 07 20•February•2020 w w w. N E W S B A S E . c o m P9
