A Russian oil company used to provide a workaround to U.S. oil trading sanctions on Venezuela is scrabbling to avoid another set of sanctions, documents show, this time from Europe and the United States over Russia’s invasion of Ukraine.

Russia is one of Venezuela‘s few allies on the international stage. Russian companies have helped state-run oil firm PDVSA sustain output in recent years despite U.S. sanctions intended to deprive President Nicolas Maduro’s government of its main source of export income.

Roszarubezhneft was incorporated in 2020 and soon afterwards acquired the Venezuelan holdings of Russian state-run oil giant Rosneft ROSN.MM as Washington imposed sanctions on two of Rosneft’s units for trading Venezuelan oil.

The five joint ventures Roszarubezhneft acquired produce some 125,000 barrels per day (bpd) of crude in Venezuela and employ some 200 Russian and local workers, according to sources and analysts. That is equivalent to about 16% of the 788,000 bpd that Venezuela produced last month.

Roszarubezhneft is attempting to transfer ownership of its Venezuelan assets from its European units to another company in Russia to avoid “the blocking of the activities or the confiscation of assets of companies of the group,” said one of several company documents reviewed by Reuters.

Transferring the ownership of the assets was necessary to “preserve control and the management of assets and stable functioning of its business units,” according to a March 16 letter sent by a Roszarubezhneft executive to its Venezuelan subsidiaries.

The letter did not say when the transfers might occur, nor where in Europe the businesses were registered. Roszarubezhneft executives blamed their plight on “unfriendly actions of the United States and its allied foreign states and international organizations.”

Existing sanctions have already hit Roszarubezhneft’s business in Venezuela by depriving it of hard currency, according to the documents, leaving it to pay workers and suppliers in the South American country in roubles and Venezuelan bolivars.

Roubles are not widely accepted in Venezuela‘s increasingly dollar-based economy and there are no authorized foreign exchange businesses. Russian workers paid in roubles would have to find someone willing to swap them for dollars or euros.

The difficulties highlight the far-reaching impacts of sanctions on Russian companies and their international operations. The lack of hard currency led Roszarubezhneft’s managers in Venezuela to write their bosses bemoaning the inability to pay for housing, insurance and everyday needs, the documents show.



The United States sanctioned Venezuela‘s oil sector in 2019 hoping to force out Maduro and over time blacklisted companies trading Venezuela‘s crude. The sanctions sharply cut Venezuela‘s oil exports but failed to oust the socialist leader, whose re-election Washington called a sham.

Most of Rosneft’s employees stayed in the country after the asset transfer, according to two people familiar with the matter. Rosneft’s former chief in Venezuela is now the legal representative of Roszarubezhneft’s Petrolera (Cyprus) Ltd, according to a document seen by Reuters and online records.

Roszarubezhneft is owned by Russia’s Federal Agency for Government Property Management, a unit of the Russian Ministry of Economic Development, according to Russian state-owned news agency Tass, which described the company at its formation as having equity of $4.06 billion.

The March 16 letter from the Roszarubezhneft executive called on managers in Venezuela to promptly complete the equity transfers and to notify Venezuela‘s PDVSA of the change.

Of its assets in Venezuela, stakes in the joint ventures Petroperija, Boqueron and Petromonagas are held by units based in Europe and would be transferred to Moscow-based Petromost, the letter said, which according to corporate registry records online is also owned by Roszarubezhneft.

The Venezuelan state oil company has not yet been formally notified, a person familiar with the matter told Reuters on Monday. PDVSA and Roszarubezhneft executives met in Caracas last week to discuss plans to boost output, the person added.

PDVSA did not reply to a request for comment. Roszarubezhneft did not immediately respond to a request for comment sent through its website. Attempts to reach Roszarubezhneft in Caracas on phone numbers previously used by Rosneft were unsuccessful.

Reuters could not find official contact details for Petromost. Messages sent to email addresses that unofficial websites providing corporate information said were for Petromost bounced back.



Roszarubezhneft’s Venezuelan units have been forced to switch from dollar-denominated salaries to roubles and Venezuelan bolivars following U.S. and European Union sanctions barring transactions with some Russian companies, according to two people familiar with the matter and one of the documents seen by Reuters.

Outlays for transportation, insurance and staff housing in Venezuela have been stymied by a lack of hard currency. Visa and Mastercard’s suspension of Russian operations means Roszarubezhneft’s employees, mainly Russian citizens, “can no longer make payments to ensure their daily life,” wrote a manager from Venezuela.

“The company has lost the opportunity to fulfill its obligations in hard currency to pay wages to contractors, local workers and personnel,” said a March 7 letter sent from one of the Venezuela units to Roszarubezhneft’s CEO, Nikolay Rybchuk.

To pay housing for the Russian workers in local currency would boost costs by up to 30%, the unit informed its bosses. Paying salaries in bolivars would also expose Venezuelan workers to hyperinflation, which authorities said was 686% last year. Some staff would accept a delay in payment until available in hard currency, the letter said.

The unit asked the parent company for permission to allow workers to conduct individual foreign exchange transactions in Venezuela which would have to be done on the informal market. – Reuters