On May 15, Russian oil company Rosneft officially ceased all operations in Venezuela, as chairman Igor Sechin informed while presenting the company’s quarterly results.
“In second quarter of 2020, the company closed a previously announced transaction to transfer to a company that is 100% owned by the Government of the Russian Federation all assets in Venezuela. This includes participation shares in projects of Petromonagas, Petroperija, Boqueron; Petromiranda and Petrovictoria, as well as oil-field service companies and trading operations. Company’s operations in Venezuela have been completely discontinued,” Sechin was quoted as saying in a press release.
A strategic exit
On March 28, 2020, the Russian government announced the sale of all Rosneft assets in Venezuela to a non-identified state company, in exchange for 9.6% of the company’s registered ordinary shares.
The name of this company was not disclosed. However, on that same day, Russia’s Federal Agency for State Property Management established new company Roszarubejcenter. According to the registry data, the company was established on March 28. Some speculate this is the company that purchased Rosneft’s assets in Venezuela.
The sanctions imposed by the United States were the main reason behind Rosneft’s exit from Venezuela. Selling these assets, experts have said, would help it avoid these measures. Another motive is the company’s losses in the nation, with independent analysts saying it had negative return on investment.
Early this year, the U.S. sanctioned Rosneft’s Swiss trading arm. This measure is part of the Trump administration’s attempts to block Maduro’s access to any source of revenue. Indeed, the White House stated it is ready to tighten the measures against the Venezuelan government.
Meanwhile, Russia’s main oil producer reported a first quarterly net loss of $2 billion. The drop is a result of low oil prices and the depreciation of the Russian ruble, the company said. The losses in this first quarter are compared with the $1.9 billion net profit reported in 1Q 2019.
In detail, the firm’s oil output fell by 2.2% year-on-year to 4.64 million barrels per day. This decrease stems from “the continued commitment to respect the OPEC+ agreement,” Rosneft said.
“At a time when many oil and gas companies around the world are taking decisions to reduce their dividends and terminate the share buyback programs; the Company’s decisions to continue cash distribution to the shareholders speak to our confidence in the ability not only to successfully cope with the new challenges, but also to emerge from this difficult situation as an industry leader. We hope that this approach will be appreciated by the financial community and reflected positively in the Company’s share price,” Rosneft’s said in its financial statements.
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