Rosneft sells Venezuela operations to Russian state firm

MOSCOW (Reuters) – Russia’s largest oil producer, Rosneft, said on Saturday it had terminated operations in Venezuela and sold the assets linked to its operations there to an unnamed company owned by the Russian government.

It was not immediately clear if the move, announced at a time when oil prices are languishing at around $25 per barrel, would change much in practice or whether it was a legal move to protect Rosneft from U.S. sanctions.

The United States earlier this year imposed sanctions on two Rosneft subsidiaries – Rosneft Trading and TNK Trading International, a Swiss-based unit of the company.

The aim was to ramp up pressure on the Russian state oil giant, which U.S. President Donald Trump’s administration has said provided a financial lifeline to Venezuelan President Nicolas Maduro, whom Washington has called on to step down.

The change of ownership announced on Saturday means any future U.S. sanctions on Russian-controlled oil operations in Venezuela would target the Russian government directly.

Kremlin-controlled Rosneft has a number of international shareholders, including oil major BP, which owns 19.75% in the company. By withdrawing from Venezuela and passing its assets to an entity owned by Moscow, Rosneft, headed by Igor Sechin, a close ally of President Vladimir Putin, transfers the risks related its Venezuelan operations to the Russian government.

The U.S. State Department did not immediately respond to a request for comment.

Rosneft spokesman Mikhail Leontiyev told Reuters the decision to terminate operations in Venezuela was meant to protect the company’s shareholders.

“We defended the interests of our shareholders and did it in an effective way,” said Leontiyev. “And to whom the risks go is not an issue for us. The main thing is that the risks are leaving us.”

Rosneft would not disclose the name of the company to which it had sold its Venezuelan operations. A spokesman for the Russian government confirmed it had purchased Rosneft’s operations in Venezuela, but declined to say what company was involved in the deal.

Rosneft said the Venezuelan assets sold include those in the joint ventures of Petromonagas, Petroperija, Boqueron, Petromiranda and Petrovictoria, as well as in oilfield services companies, commercial and trading operations, it said.

Venezuelan state oil company PDVSA and the country’s oil ministry did not immediately respond to requests for comment.

Russia’s ambassador to Venezuela, Sergei Melik-Bagdasarov, wrote on Twitter that the deal would allow the two countries to continue working together.

“Don’t worry! This is about the transfer of Rosneft’s assets in Venezuela to Russia’s government directly. We will remain together going forward,” he wrote in a Tweet that was retweeted by Maduro.

Rosneft said it would be receiving a settlement payment worth a 9.6% share of Rosneft’s equity capital that would be held by a subsidiary.

Washington has long sought to isolate the socialist Venezuelan government as it seeks to pressure Maduro from power.

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