Venezuela, Russia renew bilateral ties – interesting to watch play out with OPEC + production quotas

Russia is among Venezuela's leading international patrons and a vocal opponent of the US-led sanctions that have targeted the government of President Nicolas Maduro since 2017.

Russian deputy prime minister Yuri Ivanovich Borisov led a delegation to Caracas yesterday in a sign of renewed bilateral ties.

Russia is among Venezuela’s leading international patrons and a vocal opponent of the US-led sanctions that have targeted the government of President Nicolas Maduro since 2017.

The two sides signed 12 agreements covering energy, financial, transport, military, agricultural and pharmaceutical cooperation, among other areas, under the auspices of a high-level joint committee that will meet again in Moscow in the second half of 2021, Venezuelan oil minister and committee co-president Tareck El Aissami said.

The visit “resolved almost all the pending issues and our commercial and economic relations have been renewed,” Borisov said, without detailing the outstanding issues. “We have shown our capacity to counteract sanctions and Venezuela has a stable social situation.”

Bilateral trade has grown by 4pc and “we are working to grow this further,” he added.

El Aissami said Venezuela proposed a 2021-31 “structural” agreement with Moscow to further deepen their cooperation.

Although Venezuela has been marginalized from Opec because of its diminished oil production and US sanctions, El Aissami drew attention to the production restraints of Opec+, led by Russia and Saudi Arabia.

El Aissami highlighted the “virtuous mechanism” of the Opec+ countries that seeks to “stabilize, recover and gradually and sustainably rebalance the global oil market” and open the way for post-pandemic prosperity.

Among the Russian companies that were part of the delegation was Rostec, which said it is in talks with Venezuela on applying its technology to the country’s oil industry.

Russia’s Rosneft transferred its Venezuelan oil assets to an unnamed Russian state-owned enterprise in March 2020 after the US sanctioned two of its trading arms. The company had accounted for most of Venezuelan state-owned PdV’s crude liftings in the period after US oil sanctions were imposed in January 2019. The liftings serviced PdV’s debts to Rosneft, which maintains a nominal foothold in undeveloped offshore gas blocks in eastern Venezuela. It is not clear if all of Venezuela’s debt to Russia has been paid.

The Russian visit coincides with Venezuelan government efforts to bring back private-sector investment under a new “anti-blockade” law that has so far borne little fruit.

The talks took place as Covid-19 infections surge across Venezuela. The country has received modest shipments of Russia’s Sputnik V vaccine and has authorized trials of a second Russian vaccine, EpiVacCorona.

Venezuela’s US-backed opposition blames Russia for propping up Maduro, who recently proposed using oil exports to secure more vaccine supplies. The government and the opposition recently reached a rare preliminary accord to access western vaccines through the international Covax mechanism, tapping more than $30mn in Venezuelan government funds frozen in the US.

About Stu Turley 1967 Articles
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience in implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor in this space. Stuart has led the “Total Corporate Digital Integration” platform at Sandstone and works with Sandstone clients to help integrate all aspects of modern digital business. He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage and is the Co-Host of the energy news video and Podcast Energy News Beat. Stuart is on Board Member of ASN Productions, DI Communities Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.