U.S. sanctions cut off PDVSA Caribbean revenue
Petroleumworld 04 04 2019
US sanctions have blocked Venezuela´s state-owned PDVSA (PdV) from accessing revenue generated by its refinery stakes in the Dominican Republic and Jamaica.
The loss of the Caribbean revenue stream highlights the indirect impact of the sanctions, which escalated into US oil sale restrictions on 28 January. Washington levied financial sanctions on the Opec country in 2017. The EU and Canada have targeted sanctions in place as well.
Banks are reluctant to conduct transactions with PdV, and this has halted all financial transactions with the company, Jamaican and Dominican officials say.
PdV has a 49pc interest in both Jamaica's 35,000 b/d Petrojam refinery and in the Dominican Republic's 34,000 b/d Refidomsa plant. State companies own the majority stakes.
The Dominican finance ministry has placed $18mn of PdV funds in escrow in a local bank, representing profits from PdV's 49pc stake in Refidomsa, Refidomsa chief executive Felix Jimenez said.
The funds have not been paid to PdV "because no bank wants to do business with Venezuela because of the US and EU sanctions," Jimenez said.
Similarly, Jamaica is retaining PdV proceeds as "there is no channel through which any money can be paid because banks fear being targeted if they violate the sanctions," Jamaica's finance ministry tells Argus .
Jamaican legislators in early March approved the takeover of the PdV asset, and the government said it had placed an unspecified amount in escrow to pay for the stake.
The two Caribbean countries say PdV has neither fulfilled past pledges to upgrade the refineries, nor responded to their overtures to sell them the assets.
PdV bought the Petrojam stake in 2006 and the Refidomsa asset in 2009, and promised to expand Petrojam to 50,000 b/d and Refidomsa to 60,000 b/d. The sanctions now intensify the need to disengage from PdV altogether, government officials say.
Strained relations between Venezuela and the Dominican Republic took another turn this week. Jimenez denies Venezuelan claims that Santo Domingo plans to transfer PdV's refinery stake to Venezuelan opposition leader and self-appointed interim president Juan Guaidó, who is pressing for the departure of President Nicolas Maduro.
The claim was made on 25 March in Caracas by the Maduro administration's communications minister Jorge Rodriguez, who also said the Dominican Republic owed Venezuela $240mn for oil supplied by PdV.
The Dominican Republic "does not owe Venezuela one dollar for oil," Jimenez said yesterday, adding that "Refidomsa has not defined who to recognize as its shareholder. . . neither Maduro nor Guaidó."
The Dominican government has said it recognizes Guaidó. Jamaica has remained on the fence.
Jamaica and the Dominican Republic had been top beneficiaries of Venezuela´s PetroCaribe subsidized oil supply program that the country can no longer sustain. Jimenez said the last shipment of Venezuelan crude was received on 15 December 2015, and was paid for on 10 January 2016, Jimenez said. Diesel and jet fuel received on 8 March 2017 was paid for on 22 March 2017.
Both the Dominican Republic and Jamaica issued bonds in 2015 to redeem PetroCaribe debt to Caracas.
Dominican president Danilo Medina, Jamaican prime minister Andrew Holness and three other Caribbean leaders met US president Donald Trump briefly in Florida on 22 March, part of a US-led campaign to galvanize regional support for Guaidó.
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