February 11, 2019 / 10:21 PM / 10 days ago

Venezuela pressures foreign partners on oil venture commitments: sources

(Reuters) - Foreign partners of Venezuela’s PDVSA are facing pressure from the state-run oil firm to publicly declare whether they will continue as minority stakeholders in Orinoco Belt projects following U.S. sanctions, three people familiar with the matter said.

FILE PHOTO: A supporter of Venezuela's President Nicolas Maduro holds a banner during a rally in support of him in Urena, Venezuela, February 11, 2019. REUTERS/Marco Bello/File Photo

The sanctions on Petroleos de Venezuela (PDVSA), imposed last month in an attempt to dislodge Venezuelan President Nicolas Maduro, barred access to U.S. financial networks and oil supplies for the PDVSA joint ventures, pressuring Venezuela’s already falling crude output and exports.

PDVSA’s Orinoco Belt joint venture partners, mostly U.S. or European companies, are facing difficulties getting cashflow out of the country as a result of the sanctions, straining their ability to continue production and exports.

PDVSA has been in talks with the companies to persuade them to commit publicly to the joint ventures, the sources said in recent days.

France’s Total SA, Norway’s Equinor ASA, Russia’s Rosneft and U.S.-based Chevron hold minority stakes in joint ventures with PDVSA that produce crude and operate oil upgraders capable of converting Venezuela’s extra-heavy oil into exportable grades.

PDVSA did not reply to a request for comment. On Monday, Venezuelan Oil Minister and PDVSA head Manuel Quevedo said on a visit to India that relations with international oil companies including Chevron were continuing.

A manager at Rosneft said last week that the company did not expect oil output to decline at its projects in Venezuela this year, adding that the company saw the current situation in Venezuela as temporary.

Rosneft did not respond to a request for comment on Tuesday.

The four crude upgraders are capable of converting up to 700,000 barrels per day. The oil is exported by the joint ventures and each partner receives its share of the exports.

Total believes it can stay in Venezuela, its Chief Executive Patrick Pouyanne said on Monday, although last week the company said its bank accounts were blocked and it had evacuated its foreign employees.

Rosneft has continued working normally at its Petromonagas joint venture with PDVSA, according to the sources.

Equinor declined to comment on operational issues, referring questions to Petrocedeno, its joint venture with PDVSA.

Chevron’s operations in Venezuela are continuing, a spokesman said on Monday, reiterating that the company was committed “to the country’s energy development in compliance with all applicable laws and regulations.”

Even if the companies commit to Venezuela, their ability to produce could be crimped by the sanctions. Last week PDVSA ordered Petrocedeno to halt oil production and upgrading, due to a lack of naphtha to dilute the extra-heavy crude, according to sources from the project.

FILE PHOTO: The corporate logo of the state oil company PDVSA is seen at a gas station in Caracas, Venezuela, January 28, 2019. REUTERS/Andres Martinez Casares

The Petrocedeno-PDVSA venture’s 220,000-bpd upgrader was already out of service when the decision was made, one of the people said. It is unclear when oil output will be halted.

PDVSA is studying if the other joint ventures in the Orinoco will have to halt operations, with diluent supplies dwindling, the people said.

India’s Reliance and PDVSA’s U.S. unit Citgo Petroleum are the main suppliers of naphtha to Venezuela, according to internal PDVSA data. Those flows have declined since sanctions took effect on Jan. 28, according to Refinitiv Eikon data.

Reporting by Marianna Parraga in Mexico City and Deisy Buitrago in Caracas; additional reporting by Nerijus Adomaitis in Oslo, Olesya Astakhova in Moscow; Editing by Rosalba O'Brien and Susan Fenton

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