Petroleos de Venezuela SA will receive a “pre-payment” of $2 billion for oil supplied to OAO Rosneft as South America’s biggest oil exporter seeks financing amid domestic shortages and the world’s fastest inflation.
Russia’s state-run Rosneft will pay $2 billion to PDVSA, as the state company is known, in exchange for more than 1.6 million tons of oil and 7.5 million tons of oil products during a five-year period, Rosneft said in a statement posted on its website May 24. On March 7, Venezuela signed a memorandum of understanding with Rosneft for $2 billion in financing for oil projects in Venezuela.
“This agreement represents a new phase of partnership between Rosneft and PDVSA,” Rosneft CEO Igor Sechin said in the statement. “Following the partnership in the upstream sphere our companies start to cooperate in the sphere of trading.”
Venezuela is seeking financing as it combats shortages of goods and medicines and 59 percent inflation in a country with the world’s biggest oil reserves. PDVSA will sell as much as $5 billion of dollar bonds due in 2024 to state banks, with an interest rate of 6 percent, it said May 14.
The banks will probably sell the notes to importers, who will raise dollars by selling them to overseas investors, according to Tamara Herrera, chief economist at financial research firm Sintesis Financiera.
The bond issue comes after shortages of everything from car parts to pregnancy tests spurred three months of protests against the government of President Nicolas Maduro, leaving 42 people dead. Currency controls imposed under the late President Hugo Chavez have left importers unable to access foreign currency to buy goods overseas.
Venezuela allowed its bolivar in March to plunge 88 percent on a new market known as Sicad II. State banks are allowed to sell dollar-denominated bonds under the system to companies and individuals, who can then obtain hard currency by turning to the secondary bond market.
Rosneft is the world’s largest publicly traded oil company by output and reserves. Rosneft and PDVSA have 5 oil joint ventures in Venezuela.
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