Rosneft to invest $500 million to increase stake in Venezuelan state-owned company
Venezuelan President Nicolas Maduro announced on Friday that Rosneft has invested another $500 million in the state-owned Petroleos de Venezuela SA (PDVSA) to acquire a greater stake in the crude-processing joint venture.
The leading oil producer of Russia made this proposition with a purpose of increasing its stake to 40%, which, according to Reuters, is the ceiling for foreign investors when it comes to holding stake in the Petromonagas joint venture in Venezuela's Orinoco Belt region.
"Today we are going to sign (for) an additional investment of $500 million in the Orinoco belt from Rosneft which is going to raise its participation up to 40 percent," Maduro announced in a live broadcast. Rosneft initially had only 16.7% stake in PDVSA.
However, "the $500 million in new investment for production in the Venezuelan oil industry comes amid a crisis," Maduro added at the event where Rosneft and PDVSA officially signed the deal in Caracas, according to Bloomberg. In January, Maduro declared an economic emergency in Venezuela, two days after the nation's oil prices hit its all-time low of $24 a barrel. To protect the oil-dependent nation from collapsing altogether, the president increased their petrol prices and announced a currency devaluation for the first time in two decades.
The 60% increase in oil prices, from just under 0.1 bolivars per liter to six bolivars, apparently "is a necessary action" for which Madurao claims to take all responsibilities. "The time has come to establish a system that guarantees access to hydrocarbons at a fair price but that also guarantees the funding of investment in producing that gasoline," he addressed his citizens, according to Naiji. The president is certain that official exchange rates for essentials like medicine and food, which are usually the strongest, would weaken to 10 bolivars per US dollar.
In the face of such trying times, the Petromonagas project reportedly produces 133,600 barrels of synthetic crude a day, on an average, as indicated by the latest data from PDVSA. The company usually uses traditional refineries to process oil.
The state-owned entity and Rosneft have further collaborated for the development of the Mejillones and Patao offshore natural gas fields, which is a part of the Mariscal Sucre project. The country has been requesting its partners to raise their investments in joint ventures for many years now, probably anticipating a slowing economy.
In 2013, the then oil minister Rafael Ramirez had provided greater autonomy to the companies operating in the Orinoco Belt in an attempt to coax them into bringing their own rigs, services and basically financing for the joint ventures.