Sanctions On Pdvsa Suspended Temporarily

(MENAFN- IssueWire)

Washington, D.C, District of Columbia Oct 21, 2023 (Issuewire )
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OFAC authorizes transactions related to the production and sale of Venezuelan crude Oil, Gas, and Gold in the United States. Additional measures are expected to allow financial transactions in the international market. Possibly in the future, U.S. companies could act as intermediaries in the purchase and sale of Venezuelan Hydrocarbons. For the time being, (Reuters reports) these operations are carried out by companies located in countries such as UAE, Singapore, Malaysia, and Hong Kong, among others.

IMPLICATIONS:
Daniel Oliveros, Analyst on Refined Products Markets, shared his opinion on the impact of this decision.

i) License No. 44, which practically normalizes PDVSA's activity worldwide, as regards its value chain such as exploration, exploitation, transportation, storage, refining, and commercialization for crude oil, products, and by-products from October 18, 2023, to April 18, 2024, which represents a period of six months. The marketing and transportation of liquid and gaseous hydrocarbons, as well as solid by-products such as petroleum coke and sulfur, will again be able to take place internationally without limitations. This should result in an increase in the sale prices of Venezuelan liquid hydrocarbons, as well as coke, since they can compete on equal terms with the rest of the world's crude oil and products, with the only limitations generated by the market. On the other hand, the freight market to and from Venezuela should decrease in price, given the decrease in risk perception by shipowners.

This implies the return of the large and traditional hydrocarbon traders and the change of the commercialization method by PDVSA's Trade and Supply. The rapid importation of HVN Heavy Naphtha or diluent, as well as gasoline and diesel from the US Gulf Coast (USGC), after only five days of navigation, could quickly increase the production of extra heavy crude oil from the Orinoco Oil Belt by about 70 thousand barrels per day (MBD), depending on the state of the surface facilities, as well as the products mentioned (Gasoline 91 and 95, Gasoil 0.5) to add fuel volume to the domestic market. Likewise, the production of Petrocedeño commercial crude, DCO, or Merey-type blended crude could be increased in the event of obtaining light crude as a diluent through imports, which would represent greater financial resources for the Venezuelan State.
The oil industry can acquire goods and services, with the respective payment of the invoicing generated, without inconveniences of any nature. Likewise, new investments can be made in growth activities such as new drilling or maintenance of wells and facilities.
All of the aforementioned activities related to citizens, companies, or the financial system linked to the Russian Federation are expressly prohibited. This directly affects at least the five (05) joint ventures Petromonagas, Petrovictoria, Petromiranda, Petroperijá, and Boquerón (crude oil production joint ventures in association with Corporación Venezolana de Petróleo CVP) whose partners belong to Petrolera RT formerly Rosneft. Of the remaining 40 joint ventures, there are no problems.

Thus, the sanctions on the Venezuelan oil industry are practically lifted, at least for six (06) months.
ii) On the other hand, the 5M License will apparently allow financing operations related to two Bond issues made by PDVSA on October 28, 2014, and October 28, 2016, maturing or maturing in 2020, with a coupon of 8.5% interest. The question is what will happen to the other 15 bond issues made by PDVSA since 2007, as well as the 4 issues made by Cerro Negro Finance LTD and one by Nynas. There is also no mention of what will happen to the various and numerous bond issues made by centralized agencies such as Electricidad de Caracas, and the Bolivarian Republic of Venezuela itself.

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