Caracas, March 23, 2023 (venezuelanalysis.com) – Venezuelan state oil company PDVSA has reportedly accumulated over 20 billion US dollars in lost revenue since 2020 as a consequence of dealings with unreliable intermediaries to allocate crude amidst Washington’s blockade.
An audit of PDVSA contracts has revealed that just 16 percent of oil sales over the past three years have brought in cash, with only $4.08 billion confirmed in received payments out of $25.27 billion from total exports between January 2020 and March 2023, according to internal documents viewed by Reuters.
The remaining $21.2 billion are unpaid bills including an outstanding balance in swap agreements with longtime partner Iran that should be settled through various exchange mechanisms. Since 2020, Tehran has supplied PDVSA with condensate, crude as well as other inputs and technicians to jumpstart pumping and refining activities in return for Venezuelan heavy crude cargoes.
However, an estimated $3.6 billion are potentially irretrievable after internal PDVSA sources said that contract documents show that executives had authorized unknown tankers to leave the country without paying. In some cases, payment papers were not registered in the state company's contract administration system altogether.
The transactions with unreliable middlemen have their roots in Washington’s financial sanctions, export embargo and secondary measures imposed against Venezuela’s oil industry since 2017. Blocked from international markets, Caracas first turned to longtime partner Rosneft to lift production and redirect cargoes to their final destinations, but the arrangement was halted after the US Treasury Department hit the Russian firm with secondary sanctions in early 2020.
With the US blockade driving away established trade partners, the Caribbean nation has been forced to resort to smaller or inexperienced intermediaries to place its crude in Asian markets by selling at big discounts. The unorthodox system has led to numerous payment delays as well as corruption schemes inside PDVSA.
Although unconfirmed by the Venezuelan government, the unaccounted $3.6 billion from tankers that left without paying could be related to the reported $3 billion that have been looted from the country’s public coffers, as revealed during a recent anti-corruption operation that has seen several high-ranking figures arrested in the past week.
Among those apprehended are PDVSA's former vice president of supply and trade, Antonio Pérez Suárez and 20 other executives who worked for him, as well as Samuel Testamarck, general manager of PDV Marina, which is in charge of maritime distribution and transport.
Following the arrests, the Campesino Struggle Platform announced they had occupied four farms allegedly property of Pérez Suárez in the Sur del Lago region, Zulia state. “President Nicolás Maduro the mobilized people give you their full support in the fight against corruption,” tweeted the campesino leaders.
On Monday, Venezuelan Oil Minister Tareck El Aissami presented his resignation to facilitate the investigation, stating to “fully support the process.” His stepping down followed the arrests of two of his close associates: United Socialist Party of Venezuela (PSUV) lawmaker Hugbel Roa and National Crypto Asset Superintendence (Sunacrip) head Joselit Ramírez, for their alleged involvement in corruption schemes.
El Aissami himself had unveiled an alleged corruption plot led by former Oil Minister Rafael Ramírez last September. The former minister has not been accused of anything so far.
Venezuelan President Nicolás Maduro accepted El Aissami’s resignation and pledged “to fully cleanse PDVSA of these mechanisms and of these people who steal from the population.”
On Tuesday, Maduro designated PDVSA president Pedro Tellechea as the new oil minister as part of “the transformation process that the industry is undergoing.” The 47-year-old engineer is also the head of the petrochemical state company Pequiven since 2019.
In early January, Tellechea’s first measure in charge of PDVSA was to suspend most oil and fuel exports in order to renegotiate sales contracts after detecting a trail of payment defaults from buyers, sounding the alarms about the siphoned-off proceeds.
The new oil minister has now set tougher rules for exports, including upfront payment before tankers set sail with Venezuelan oil or fuel while swap agreement partners, such as Iran, would have to provide goods and services in advance. Venezuela is currently producing 700,000 barrels per day (bpd) while February’s crude exports were 555,000 bpd, a four-month low following the sales hiatus.
The South American nation saw its output fall precipitously from 1.9 million bpd in mid-2017 to less than 350,000 bpd in the second half of 2020 under US sanctions. Last year, the country’s oil revenues were an estimated $4.7 billion, significantly less than the 56 billion earned five years prior and similar to the amount currently lost in untracked exports.
According to Bloomberg sources, the anti-corruption drive has been silently spearheaded by Venezuelan Vice-President Delcy Rodríguez who was tasked with holding an internal audit at the state oil company to uncover funds mismanagement.
Besides the PDVSA executives, Venezuela’s Anti-Corruption Police has detained several judges as well as businessmen and elected officers, although no connections have been fully established yet among all the people being prosecuted.
On Tuesday, Venezuela’s National Assembly (AN) approved an agreement to support the ongoing corruption probe. Deputy and PSUV leader Diosdado Cabello lamented that members of the legislative body have been involved in these “criminal acts.”
"It is important to say that this is not the first time this has happened, but the Bolivarian Revolution has never been a society of accomplices," stressed Cabello.
For his part, AN President Jorge Rodríguez stated that at least 19 people had been detained for alleged embezzlement in different areas of the public administration, without giving further details. He urged the AN to revise anti-corruption laws to apply harsher punishments.
Rodríguez added that the current operation will not be complete without prosecuting the US-backed opposition as well for stealing Venezuela’s resources abroad. A number of assets were frozen and handed to them by Washington since early 2019, including several bank accounts and US-based oil subsidiary CITGO.
"When we say the guilty will fall, whoever they are, it should also include those sectors of the ultra-right that stole more than 40 billion and [are responsible] for over 635 billion that the [US] blockade has cost the country", he recalled.