Russian oil advances in Venezuela carry mutual risks

Subject

Rosneft and the Venezuelan oil sector.

Significance

In providing a significant amount of urgently needed financing, Russia and Rosneft, its state-controlled oil company, are utilising Venezuela’s severely weakened economic and financial position to strengthen participation in Venezuela’s struggling oil industry. Venezuela’s ability to avoid financial default remains a major uncertainty, and President Nicolas Maduro is running out of financing options.

Impacts

• Venezuela’s low financial reserves and diminishing volume of oil will make forthcoming debt payments doubtful.
• China and Russia are keeping Venezuela afloat, with Venezuela recently asking Russia to restructure 6 billion dollars’ worth of debt.
• If the Maduro regime collapses, Russia’s gains could prove fleeting if a successor regime repudiates them.