Imagine if Exxon attempted to buy Venezuela’s oil industry? Well, nothing to fret about as Russia is stepping up to the plate to buy the Venezuela’s oil industry. Russia’s state-owned oil giant Rosneft is eager to take control of PdVSA, the bankrupt Venezuelan oil company that explores for and produces most of the country’s oil.

The Associated Press (AP) reported on March 28, 2020 that Russia’s Rosneft has transferred its assets in Venezuela to a company fully owned by Vladimir Putin’s government, a move apparently intended to shield Russia’s largest oil producer from U.S. sanctions. Russia looks set to be buying Venezuela’s oil. Like, all of it.

Russia’s Rosneft is a big lender to Venezuelan’s PdVSA, and PdVSA is broke so Rosneft wants to be paid. So, it makes sense that the Venezuelan government would sell something.

Looking back a few years to 2016, Maduro secured a fresh loan by giving Russian oil giant Rosneft a 49.9-percent stake in Citgo as collateral. In addition, the remaining 50.1 percent held by Venezuela’s state-owned oil company PDVSA are also collateralized under a bond issue owned by Russia. Ironically, if Moscow lets Venezuela default on its debts, then Russia would actually be able to exercise its lien on Venezuela’s most valuable asset: U.S.-based oil giant Citgo

Then in October 2019, a story in Venezuela’s El National newspaper was making the rounds in Russian media – reporting that Russian oil giant, Rosneft, was planning on taking over Venezuela’s National Oil Company PDVSA (Petróleos de Venezuela). In exchange, Russia was rumored to be offering debt relief to the struggling Latin American Country.

As Washington crushes the country with sanctions, Venezuela is unable to pay its bills and may be selling their prized possession to their biggest debtor, Russia.  Very timely, as Putin strives to be the country that dominates the world’s oil and natural gas, and ultimately control the world.

Vladimir Putin’s funding of anti-fracking efforts in America are gaining success in Washington. This as Putin’s supporters in Washington are seriously considering national anti-fracking legislation that will negatively impact the USA, the largest oil producer in the world. This to further establish Putin’s’ position, by reestablishing Russia as the top supplier to the world and fulfill his end goal to control worldwide.

Now the COPID-19 crisis is hurting demand and the price of oil is tanking. With a price war being led by Saudi Arabia and Russia, it is crushing the price per barrel, putting further financial pressures on the fracking industry that has elevated America to be a net oil exporter.

California and national political pressures are now pursuing further legislative efforts to continue reducing fracking and all in-state oil production nationwide to increase its oil dependency on foreign nations. Once Putin has his domination of the industry, he’ll have control of California, the 5th largest economy in the world, and the American continent.

As discussed at length in Energy Made Easy, the Weaponization of Energy, Chapter 11,  Russia knows that a major (and perhaps the principal) reason the Allies won World War II, was their greater access to oil, petroleum, natural gas, and coal, of which were not available to the Axis Powers of Germany, Italy and Japan. These were the vital energy sources the Allies needed for fueling their aircraft carriers, battleships, planes, tanks and armor, trucks, troop carriers and weaponry. In addition this access to energy has enabled the West to economically lead the world for over seventy years.

China, Russia, Iran, and North Korea know that the desire for renewable electricity embodied in the Paris Accord cannot support vast militaries nor the infrastructure industries that use deep-earth minerals/fuels to “make thousands of products and move things” to support economies that are busily increasing their use of fossil fuels.

Russia is now in a full-fledged battle with western powers, and its affiliated allies over the fossil fuel industry. While the rest of the world is attempting to incorporate renewable electricity from industrial wind and solar onto its electrical grids and pouring government monies into building momentum for a carbon-free society, Russia is going the opposite direction.

Energy has always been a main factor in human development, and that is especially true of today’s complex international, political, and economic systems that have been in place since the end of WWII. Whoever dominates energy, controls the world. Oil and natural gas are the weapons now being used—much as militaries have always been used—for both offensive and defensive purposes.

Unfortunately, no one weaponizes its oil and natural gas resources in the systematic way Russia does. Russia uses its political influence on the European Union (EU), Central Asia, and any country dependent on Russia for energy. Russia is one of the world’s largest oil producers and with the acquisition of the Venezuelan oil industry it will be the largest producer in the World.

As we monitor the Venezuelan financial events and their impact on the oil industry over the next few months, it may be timely to consider signing up for classes to brush up on your Russian language!

This article originally appeared at EurAsia Review.

Author

  • Ron Stein is an engineer who, drawing upon 25 years of project management and business development experience, launched PTS Advance in 1995. He is an author, engineer, and energy expert who writes frequently on issues of energy and economics.