Venezuela’s PDVSA is in talks with Russia’s Rosneft, Italy’s Eni, Spain’s Repsol and Norway’s Statoil to get credit for oil and gas projects, said a company executive on November 24, 2017, in a bid to reverse a slump in output to an almost 30-year low.
Venezuela and state-run oil company PDVSA, are seeking fresh funding as the country works to refinance $60 billion of debt in the face of U.S. sanctions against what the White House calls President Nicolas Maduro’s «dictatorship.«»
«We are speaking to our allies, with our strategic partners, which are Rosneft, Eni, Repsol, Statoil, and they are willing to continue working with us, to continue financing our projects to boost crude and gas output in the short-term,» said Cesar Triana, PDVSA’s vice president for gas.
As the government struggles to get funds for debt payments, little money is available to maintain and repair PDVSA’s oil operations.
Venezuela’s overall crude output declined in October to less than 2 million barrels per day (bpd), the lowest since 1989, according to government data reported to the OPEC. Output has declined year-on-year since 2012.
Venezuela aims to boost oil output by 500,000 bpd next year, Triana said on the sidelines of a gas exporter meeting in Santa Cruz, Bolivia.
Venezuela has failed to meet its own ambitious production targets in recent years.
In August, U.S. President Donald Trump signed an executive order prohibiting banks from inking fresh debt deals with the Venezuelan government or its state oil company, accelerating the South American nation’s slide into what 2 credit rating agencies have declared as a partial default.
Triana said that the sanctions are mainly affecting the daily movement of payments, since banks have been refusing to accept dollars from Venezuela and PDVSA.
Venezuela is negotiating with customers to switch the payment currency for some oil supply contracts from the dollars to the Chinese yuan and the Russian rouble as a way to sidestep limited access to the U.S. financial system, he said.
PDVSA is also seeking financing from China and Russia, he said.
Venezuela and Russia this month signed a $3.15 billion refinancing deal, which will reduce due payments in the coming decade. But the deal excluded $6 billion of PDVSA’s outstanding debt to state-run oil firm Rosneft.
Russia has become Venezuela’s lender of last resort in recent years, providing cash to shore up Maduro’s administration.
Triana said Venezuela’s efforts to restructure debt were going well, since most creditors are concentrated in China, Russia, and part of Europe.
«We are the best payers in the world,» he said, citing payments of over $70 billion to bondholders and creditors in recent years. «However, given these sanctions, we are going through cash flow problems and that is why we need to ease the burden a little on debt payments in the short term by extending it into the longer term,» he said.
Triana also said that several oil service companies last year agreed to swap overdue service fees for promissory notes extended by PDVSA.
That limited the impact that unpaid fees to the firms had on Venezuela’s oil and gas operations, he said.