The Russian state-owned oil firm Rosneft could soon possess a majority stake in the Houston-based oil company Citgo, Senator Bob Menendez warned this week. Menendez penned a letter to Secretary of Treasury Steve Mnuchin in which he expressed concern that Venezuela’s economic death spiral could cause it to default on loans that would ultimately give Rosneft a controlling stake in Citgo shares. The Hill reports:
Petróleos de Venezuela, Venezuela’s state-owned oil company, used 49.9 percent of Citgo’s shares as collateral for a loan. If Venezuela’s economic crisis continues and the company defaults, Menendez said Rosneft may take control of the shares, which would combine with the Russian company’s other interests in the company to give it majority control.
“This could leave Rosneft, a Russian company controlled by oligarchs with close ties to [Russian President] Vladimir Putin, in control of critical energy infrastructure in the United States,” Menendez told Mnuchin in a letter.
Venezuela’s own state-owned oil company has become increasingly desperate in recent months to find financing to stay afloat. Bargain crude prices have crunched what was an already mismanaged organization and Petróleos de Venezuela (PDVSA) has on multiple occasions been unable to pay oil services companies for, well, their (much-needed) services. Venezuelan roughnecks are literally going hungry as their wages go unpaid.
Into this mess, enter Rosneft, which has of late begun to play the role of emergency financier to the beleaguered Venezuelans. For their help, the Russians have gained access to potentially lucrative joint ventures and are of course gaining the influence that only money can buy in the South American country. If things go from bad to worse, as they have a habit of doing in Caracas, Menendez’s worries about Rosneft’s “potential acquisition of Citgo” could become a reality.