By Alexandra Ulmer and Marianna Parraga
A听搁耻蝉蝉颈补苍听辞颈濒听company used to provide a workaround to U.S.聽辞颈濒听trading听蝉补苍肠迟颈辞苍蝉听on听痴别苍别锄耻别濒补听is scrabbling to avoid another set of听蝉补苍肠迟颈辞苍蝉, documents show, this time from Europe and the United States over Russia’s invasion of Ukraine.
Russia is one of听痴别苍别锄耻别濒补‘s few allies on the international stage.听搁耻蝉蝉颈补苍听companies have helped state-run聽辞颈濒听蹿颈谤尘听PDVSA sustain output in recent years despite U.S.听蝉补苍肠迟颈辞苍蝉听intended to deprive President Nicolas Maduro’s government of its main source of export income.
Roszarubezhneft was incorporated in 2020 and soon afterwards acquired the听痴别苍别锄耻别濒补n holdings of听搁耻蝉蝉颈补苍听state-run聽辞颈濒听giant Rosneft聽ROSN.MM聽as Washington imposed听蝉补苍肠迟颈辞苍蝉听on two of Rosneft’s units for trading听痴别苍别锄耻别濒补n听辞颈濒.
The five joint ventures Roszarubezhneft acquired produce some 125,000 barrels per day (bpd) of crude in听痴别苍别锄耻别濒补听and employ some 200听搁耻蝉蝉颈补苍听and local workers, according to sources and analysts. That is equivalent to about 16% of the 788,000 bpd that听痴别苍别锄耻别濒补听produced last month.
Roszarubezhneft is attempting to transfer ownership of its听痴别苍别锄耻别濒补n听补蝉蝉别迟蝉听from its European units to another company in Russia to avoid “the blocking of the activities or the confiscation of听补蝉蝉别迟蝉听of companies of the group,” said one of several company documents reviewed by Reuters.
Transferring the ownership of the听补蝉蝉别迟蝉听was necessary to “preserve control and the management of听补蝉蝉别迟蝉听and stable functioning of its business units,” according to a March 16 letter sent by a Roszarubezhneft executive to its听痴别苍别锄耻别濒补n subsidiaries.
The letter did not say when the transfers might occur, nor where in Europe the businesses were registered. Roszarubezhneft executives blamed their plight on “unfriendly actions of the United States and its allied foreign states and international organizations.”
Existing听蝉补苍肠迟颈辞苍蝉听have already hit Roszarubezhneft’s business in听痴别苍别锄耻别濒补听by depriving it of hard currency, according to the documents, leaving it to pay workers and suppliers in the South American country in roubles and听痴别苍别锄耻别濒补n bolivars.
Roubles are not widely accepted in听痴别苍别锄耻别濒补‘s increasingly dollar-based economy and there are no authorized foreign exchange businesses.听搁耻蝉蝉颈补苍听workers paid in roubles would have to find someone willing to swap them for dollars or euros.
The difficulties highlight the far-reaching impacts of听蝉补苍肠迟颈辞苍蝉听on听搁耻蝉蝉颈补苍听companies and their international operations. The lack of hard currency led Roszarubezhneft’s managers in听痴别苍别锄耻别濒补听to write their bosses bemoaning the inability to pay for housing, insurance and everyday needs, the documents show.
BORN OF听厂础狈颁罢滨翱狈厂
The United States sanctioned听痴别苍别锄耻别濒补‘s聽辞颈濒听sector in 2019 hoping to force out Maduro and over time blacklisted companies trading听痴别苍别锄耻别濒补‘s crude. The听蝉补苍肠迟颈辞苍蝉听sharply cut听痴别苍别锄耻别濒补‘s聽辞颈濒听exports but failed to oust the socialist leader, whose re-election Washington called a sham.
Most of Rosneft’s employees stayed in the country after the asset transfer, according to two people familiar with the matter. Rosneft’s former chief in听痴别苍别锄耻别濒补听is now the legal representative of Roszarubezhneft’s Petrolera (Cyprus) Ltd, according to a document seen by Reuters and online records.
Roszarubezhneft is owned by Russia’s Federal Agency for Government Property Management, a unit of the听搁耻蝉蝉颈补苍听Ministry of Economic Development, according to听搁耻蝉蝉颈补苍听state-owned news agency Tass, which described the company at its formation as having equity of $4.06 billion.
The March 16 letter from the Roszarubezhneft executive called on managers in听痴别苍别锄耻别濒补听to promptly complete the equity transfers and to notify听痴别苍别锄耻别濒补‘s PDVSA of the change.
Of its听补蝉蝉别迟蝉听in听痴别苍别锄耻别濒补, stakes in the joint ventures Petroperija, Boqueron and Petromonagas are held by units based in Europe and would be transferred to Moscow-based Petromost, the letter said, which according to corporate registry records online is also owned by Roszarubezhneft.
The听痴别苍别锄耻别濒补n state聽辞颈濒听company has not yet been formally notified, a person familiar with the matter told Reuters on Monday. PDVSA and Roszarubezhneft executives met in Caracas last week to discuss plans to boost output, the person added.
PDVSA did not reply to a request for comment. Roszarubezhneft did not immediately respond to a request for comment sent through its website. Attempts to reach Roszarubezhneft in Caracas on phone numbers previously used by Rosneft were unsuccessful.
Reuters could not find official contact details for Petromost. Messages sent to email addresses that unofficial websites providing corporate information said were for Petromost bounced back.
PAY IN ROUBLES
Roszarubezhneft’s听痴别苍别锄耻别濒补n units have been forced to switch from dollar-denominated salaries to roubles and听痴别苍别锄耻别濒补n bolivars following U.S. and European Union听蝉补苍肠迟颈辞苍蝉听barring transactions with some听搁耻蝉蝉颈补苍听companies, according to two people familiar with the matter and one of the documents seen by Reuters.
Outlays for transportation, insurance and staff housing in听痴别苍别锄耻别濒补听have been stymied by a lack of hard currency. Visa and Mastercard’s suspension of听搁耻蝉蝉颈补苍听operations means Roszarubezhneft’s employees, mainly听搁耻蝉蝉颈补苍听citizens, “can no longer make payments to ensure their daily life,” wrote a manager from听痴别苍别锄耻别濒补.
“The company has lost the opportunity to fulfill its obligations in hard currency to pay wages to contractors, local workers and personnel,” said a March 7 letter sent from one of the听痴别苍别锄耻别濒补听units to Roszarubezhneft’s CEO, Nikolay Rybchuk.
To pay housing for the听搁耻蝉蝉颈补苍听workers in local currency would boost costs by up to 30%, the unit informed its bosses. Paying salaries in bolivars would also expose听痴别苍别锄耻别濒补n workers to hyperinflation, which authorities said was 686% last year. Some staff would accept a delay in payment until available in hard currency, the letter said.
The unit asked the parent company for permission to allow workers to conduct individual foreign exchange transactions in听痴别苍别锄耻别濒补听which would have to be done on the informal market. – Reuters
