Reuters found out about the conditions of exchange, “Rosneft” liens on Citgo

Company “Rosneft” carries on negotiations with the Venezuelan oil company PDVSA on the exchange of their liens on the shares of us oil refinery Citgo operator for shares in oil deposits and the agreement on the supply of fuel, reports Reuters, citing two sources knowledgeable about the negotiations. The interlocutors of the Agency explained that such a move is intended to avoid problems due to possible U.S. sanctions.

One of the sources said that talks have intensified this week after US President Donald trump has threatened Venezuela with economic sanctions because of the intention of President Nicolas Maduro to initiate constitutional reform. Sanctions may include a ban on oil imports from the South American country.

This week in Moscow negotiations were held between top management of Rosneft and PDVSA, said the interlocutor of the Agency, there was a proposal to exchange a lien on a number of agreements. If the proposals are accepted, Rosneft would receive petroleum products from Citgo as partial payment for the loan, as the company will go shares in all three Venezuelan oil fields in Zulia state, shares in two offshore natural gas fields. She also will receive compensation for untimely paid dividends from the joint venture Petromonagas. In addition, in the case of an agreement, the Russian company expects to obtain the rights to sell the Venezuelan condensate (a mixture of liquid hydrocarbons contained in natural gas deposits) from the field in the Rio-CARIBE and the right to commercialize the share of Rosneft in crude oil from all joint projects with PDVSA. These rights will allow the company to export its share. According to the Agency, usually the minority partners to sell their share of oil PDVSA.

Also “Rosneft” is seeking the right to lead on a regular basis joint projects with PDVSA and control over large purchases. This will give the company more control over the projects, foreign minorities in Venezuela are trying to achieve this over the years, the Agency said one of the sources.

The representative of “Rosneft” refused to comment RBC information Agency. The Ministry of petroleum of Venezuela. PDVSA and Citgo did not respond to requests by Reuters.

The Agency says that such a deal with Rosneft may worsen the situation of PDVSA, which is experiencing a shortage of cash and are trying to produce enough oil to pay the loans from Russia and China totaling more than $50 billion and the agreement could strengthen criticism of the government of President Nicolas Maduro: his political opponents accuse him of selling oil assets, the money goes to keep the government afloat in terms of street protests and the lack of food and medicines in the country. Russia, in turn, will strengthen its financial position in Venezuela and will have access to large amounts of Venezuelan oil and greater control over mining and processing, Reuters reports.

“Rosneft” owns the collateral rights of 49.9% of American Citgo. This share she received as security for the loan of about $1.5 billion issued in 2016 Venezuela. The deal between Rosneft and PDVSA have raised concerns in the United States: in April, the congressmen addressed to the Minister of Finance Steven Mnuchin to investigate it because of the suspected threat to U.S. national security. In the event of failure of Venezuela to service the debt to Rosneft can go right of ownership of Citgo, feared by the senators. The head of “Rosneft” Igor Sechin in may stated that the Russian company has no plans to operate Citgo.

To Mochino also asked the Chairman of the national Assembly (unicameral Parliament) of Julio Borges. He asked to prevent the transition of Citgo under the control of “Rosneft”.