Venezuela Offers Petro-Based Oil Discount, Denounces “Kidnapping” of Funds

Maduro has accused Euroclear of withholding USD$1.2bn as part of international financial sanctions against Caracas.

By Paul Dobson
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President Nicolas Maduro has promoted the new cryptocurrency for a range of national and international transactions (Marco Bello / Reuters)
President Nicolas Maduro has promoted the new cryptocurrency for a range of national and international transactions (Marco Bello / Reuters)

Merida, May 3, 2018 (venezuelanalysis.com) – Venezuela has reportedly offered India a discount on oil purchases should they pay in its new cryptocurrency, the Petro, rather than use traditional dollar-based payment methods which are subject to US-led international financial sanctions.

According to India-based cryptocurrency trading firm, Coinsecure, “The offer that they have given to the Indian government is: you buy Petro and we will give you a 30 per cent discount on oil purchases.”

There has been no comment from New Delhi on whether it plans on accepting the offer which allegedly came following a visit of Venezuelan cryptocurrency specialists to the South Asian nation in which they sought to establish commercial ties with Indian firms such as Coinsecure.

In recent years, Venezuela has sought to increase oil sales to eastern economic powerhouses such as India and China, in a bid to lessen its historic dependence on the US market.

According to Quartz, India imported 8% of its oil from Latin America in 2017 in transactions worth around $5.5 billion.

Venezuela is not unaccustomed to offering favourable oil deals in a bid to forge closer geopolitical ties, with its Caribbean neighbours paying for oil in kind or over long-term low interest deals through the PetroCaribe alliance.

However, this time around, Caracas is hard-pressed to secure new non-dollar denominated trade deals in an effort to bypass US sanctions. Imposed by the Trump administration last August, the measures bar US financial institutions from lending to the South American nation, freezing Venezuelan funds in the international banking system and blocking payments using US-controlled intermediaries.

To this end, the Petro was launched in March and has sparked international financial interest following its impressive initial sales claimed to be worth $3.8 billion.

In response, US authorities have barred US citizens and firms from trading in Petros, whilst its European and Canadian allies have implemented a range of other sanctions.

Caracas has repeatedly accused international financial institutions of holding up Venezuelan state funds earmarked for vital imports.

On Monday, President Maduro denounced that European firm Euroclear had “kidnapped” USD$1.2 billion of Venezuelan funds which he said was destined for “buying food and medicine for our people.”

“The US government is chasing every last dollar that we have in the world,” he claimed.

Last November, Maduro made a similar claim against the Brussels-based firm, at that time for an alleged amount of USD$1.65 billion. It is not clear if the recent claim forms part of the original amount or if it refers to a new transaction.

Euroclear is a European financial services company which grew out of JP Morgan. It merged with British financial firm CREST in 2002 and is currently considered one of the largest firms dealing with “settlement and related securities services for cross-border transactions involving domestic and international bonds, equities, derivatives and investment funds.”

Washington’s financial sanctions have made it extremely difficult for Venezuelan authorities to renegotiate the country’s outstanding international debt, making it illegal for US banks to refinance the loans by accepting new bonds.

President Maduro has however vowed that Venezuela will honour its international financial obligations despite several US-based ratings agencies declaring the country in default following the Venezuelan Central Bank announcing a suspension of bond payments in September 2017.

However, Reuters reports that Venezuelan state oil firm PDVSA has restarted its bond payments this past April, making payments to its 2022 bond through Goldman Sachs Group and towards its 2020 $100-million bond through US firm DTC.

Economic data about the exact state of the Venezuelan economy has been difficult to find in recent years, with inflation levels and international reserves amongst the figures which the Central Bank has ceased publishing.

The lack of transparency led the International Monetary Fund this Wednesday to issue a “declaration of censure” against Caracas after a six-month warning issued in November for allegedly concealing data on the country’s economy expired.

The declaration of censure does not immediately impact Venezuela, but could see it barred from voting in IMF decision making in the future.

Venezuela has had no formal engagement with the international body for more than a decade, and President Maduro has repeatedly denounced it as an arm of US imperialism.