Russia's Rosneft oil company ceasing Venezuela operations

March 28, 2020 - 1:28 pm

MOSCOW (AP) — Russia’s state-controlled Rosneft oil company says it is ceasing operations and selling its assets in Venezuela.

Rosneft said in a statement Saturday that it decided to sell its business in Venezuela to a company that is 100% owned by the Russian government.

It said it “concluded an agreement with the company 100% owned by the government of Russian Federation, to sell all of its interest and cease participation in its Venezuelan businesses, including joint ventures of Petromonagas, Petroperija, Boqueron, Petromiranda and Petrovictoria, as well as oil-field services companies, commercial and trading operations.”

The move follows long-running U.S. efforts to press Russia into halting its oil operations in Venezuela that provided a lifeline to the government of Venezuelan President Nicolas Maduro, who is backed by Moscow.

Rosneft, led by Russian President Vladimir Putin's longtime associate Igor Sechin, said that its move means that “all assets and trading operations of Rosneft in Venezuela and/or connected with Venezuela will be disposed of, terminated or liquidated.”

It noted that "the concluded transaction and the sale of assets will result in Rosneft receiving as a settlement payment a 9.6% share of Rosneft’s equity capital that will be held by a 100% subsidiary of Rosneft and accounted for as treasury stock."

Some observers saw the move as an attempt by Russia to protect Rosneft from new rounds of U.S. sanctions while maintaining its staunch support for Maduro.

The sale could help shield Rosneft, Russia's largest oil producer, by handing over control over the Venezuelan operations to a fully-owned subsidiary of the Russian state, which isn’t answerable to private investors the way Rosneft is.

The Rosneft subsidiary that sells crude to European customers was recently hit by the U.S. sanctions, and U.S. authorities have vowed to keep pressure to force it to halt Venezuelan operations.

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