Russia Seeking Concessions With Maduro Regime To Access Natural Gas Resources

Russia Venezuela Relations
Russian President Putin and Rosneft Chief Executive Igor Sechin attend a ceremony at the Kremlin (Photo: Reuters / Sergei Karpukhin)

Following the exit of major US firms from the crisis-ridden country of Venezuela, Russia's state-controlled oil company Rosneft PJSC is now seeking opportunities to get into the country's still untapped natural gas and oil resources.

Rosneft has reportedly landed a deal with Nicolas Maduro's regime allowing it to get into the country's oil market at the cheapest possible price.

Both Russia and Venezuela reportedly signed an agreement this month that granted Rosneft substantial tax breaks for its planned operations. Rosneft will apparently be given access to the Mejillones and Patao oil fields just off the east coast of Venezuela.

The agreement further made adjustments to the accord signed by both countries in 2009. This included a "fair market price" clause in case of expropriation.

While the United States and China have already declared that they would no longer be supporting the country under Maduro's rule. Russia is taking advantage of the turmoil and is set to make significant gains with its operations in the country.

China already cut its financial exposure in the country, while the United States has made its intentions clear through its strict sanctions and its trade ban with the country.

Russia has gone in the opposite direction and has instead doubled down on its investment in Venezuela. Russia has so far loaned Venezuela more than $6.5 billion in exchange for oil and access to its resources. PDVSA, Venezuela's national oil firm, has been continually sending millions of barrels of oil to Russia through Rosneft. According to reports, Venezuela still has an outstanding debt of around $1.8 billion.

Under the new deal, which was signed by Russian President Vladimir Putin himself, Rosneft will be fully exempt from import and value-added taxes for its operations that will include two new gas fields.

Rosneft has also reportedly been granted access to the hotly-contested Deltana 5 natural gas block. Maduro had previously blocked US-owned Exxon Mobil from exploring the area. The fields are estimated to hold more than 6.4 trillion cubic feet of natural gas, which is twice the amount the proven reserves in neighboring Columbia holds.

Rosneft is reportedly studying different methods to export its increased gas production. One option would be to build a liquefied natural gas processing facility in Venezuela, while the second would be to build a pipe to transport the gas to Trinidad.

The agreement will likely only strengthen the US' previous accusations of Russia's involvement in the increasing influence of Maduro's regime. US officials have accused both Cuba and Russia of being prominent backers of Venezuela's socialist party.

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