Who owns Venezuelan oil and debt?
The importance of this obscure issue became even clearer last month, when the 35-year-old President of the National Assembly, Guaido, failed to persuade the army to give up Maduro. There is now an international financial chess match between the US and more than 50 countries, supporting Guaido as the legitimate interim president of the country, and those that are in agreement with Maduro.
In order to support Guaido, the United States initiated a series of sanctions that would hinder the sale of Maduro oil by the state-controlled company PDVSA (Petróleos de Venezuela, S.A), and channel the money to accounts controlled by Guaido.
Meanwhile, the two largest Venezuelan creditors ̵
1; China and Russia – support Madur and watch what they owe. Cuba also strengthened the regime by sending thousands of security forces in exchange for free oil.
Venezuela has the largest oil reserves in the world. It also has a huge debt, and its creditors' penetration of the tax paid is a major factor in the global division of Venezuela. The problem is that its oil supply is valuable only when it can be extracted and processed, and the country's collapsing infrastructure simply cannot produce enough oil to serve as a deposit for the entire debt book.
Due to mismanagement and disruption of the country's electricity supply, oil production fell from more than 3.5 million barrels per day in 1998. – a year ago, when Chavez started power – up to 750,000 barrels per day in 2019 from Rystad Energy. Amongst these, strict sanctions, the current oil sale price in Venezuela does not make enough money to meet the country's foreign currency needs or credit obligations. More than half of current production is already for debt, so it cannot be sold for cash in an open world market.
"Total debt is more than six times higher than annual exports. this year exports are significantly deteriorating, but no one expects Venezuela to pay its debts, and the situation is very bad compared to the number of barrels that actually generate cash flows, ”said Francisco J. Monaldi, a Latin American energy partner at Baker Institute at Rice University. Houston, Texas, tells me. Venezuelan President Nicolas Maduro, Center "class =" media__image "src =" http://cdn.cnn.com/cnnnext/dam/assets/190503134117-03-venezuela-0502-maduro-large-169.jpg "/>
Monaldi notes that even economically affected South Sudan has a much better debt-to-export ratio.
Who will end up with Venezuela's presidency will face large sums of debt that will be difficult to repay even if oil Venezuelan debt accounting problem is that there are very different calculations, which is at least 130-140 billion US dollars, but it may be up to 160 billion US dollars, depending on how you add all the arbitrations, decisions against Venezuela, the money Venezuela has for debtors and others, ”says Monaldis.
" Mortgage for the Bank "
US President Donald Brief, Multiple Bankruptcy Veteran, Points out that Russia and China are or factors Venezuelan financial gap. May 1 He told Fox Business: "The advantage (Venezuela) is that they have oil. It is pledged to the Chinese-Russian gap. They just sucked money out of all. (Venezuela) pledged the oil almost to the maximum … When you think about what needs to be done basically, it is called country closure.
In general, Venezuela could borrow more than $ 55 billion for China. US dollars and Russia at least $ 17 billion. USD.
Since 2007 China has lent over $ 60 billion Dollars to Venezuela, mainly in exchange for promises to return oil. Russia also made significant loans to Venezuela, and also sold weapons for credit. Both countries are already slowly lowering their debts by taking oil.
And Maduro's regime did not understand how to increase foreign currency, because on the open market, selling more dollars of oil, is not caused by its creditors, who owe even more oil.
Prior to US sanctions, PDVSA Venezuela raised dollars by selling nearly 500,000 barrels of oil per day to its subsidiary Citgo, a US refinery with headquarters in Houston, Texas and included in Delaware. Citgo was of great importance to Venezuela, its bond is the only debt issue that the government has constantly updated with its creditors. However, US sanctions Citgo's board was controlled by Guaido supporters and separated its bank accounts to reduce Maduro access.
"China is reluctant to continue to provide additional financial assistance because Venezuela and PDVSA already have a lot of money for them. The Russians are in the same situation, says Guedes
. “The Russians and the Chinese are basically supporting Maduro. The opposition also realizes that it wants to make financial commitments with any creditor. Of course, creditors will have to be part of the solution, not part of the problem. "
But so far, the actions of Guaido's parallel administration could have overcome all creditors' confidence. pay nearly $ 9 billion to Conoco-Phillips, awarded last March. World Bank Arbitration.
In addition, Guaido's team of lawyers told federal and state judges in Pennsylvania and Delaware that it would seek to stop the Canadian Crystallex mining company from being obliged to sell Citgo shares to collect $ 1.2 billion arbitration.
If Maduro is replaced by a new government, the legitimacy of many of the financial agreements agreed by Chavez and Maduro in the last 20 years may be challenged in international court proceedings, Rendon says, since the Venezuelan National Assembly has never approved Debt Dealers – Guaido Sponsors Believe It Is The Only Legitimate Government Body – First