Venezuela Arrests Oil Exec for Corruption, Receives $4bn in Russian Investment

Moscow and Caracas are reportedly working on a long-term cooperation agreement set to last at least until 2030.

By Paul Dobson
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The 16th Russia-Venezuela High Level Intergovernmental Commission (CIAN) met in Caracas on Saturday, signing 264 agreements. (VTV)
The 16th Russia-Venezuela High Level Intergovernmental Commission (CIAN) met in Caracas on Saturday, signing 264 agreements. (VTV)

Mérida, September 30, 2019 (venezuelanalysis.com) – The president of a Venezuelan-Chinese joint oil venture has been arrested on charges of corruption.

Venezuelan national Alberto Emilio Bockh was detained last Thursday by military counterintelligence (DGCIM) in the eastern state of Anzoátegui, where the headquarters of the Sinovensa firm are located.

Sinovensa’s general services director, Domingo Raga, Finance Director Leon Jose Gonzalez, and former Security Director Alejandro Armas Cordero were also arrested alongside Bockh, while Contracting Director Yurialbert Garcia is being sought by the DGCIM.

Few details of the alleged corruption network have been made public, and Attorney General Tarek William Saab declined to mention the case in a press conference held the following day concerning the 144 police personnel arrested for corruption since 2017.

Sinovensa is 51 percent owned by Venezuela’s state-run oil company, PDVSA, and 49 percent by the China National Petroleum Corporation (CNPC). The joint firm processes extra heavy Orinoco crude and blends it with lighter grades to produce Merey blend, which is favoured by Asian markets where the majority of Venezuela’s oil trade is now directed.

The firm is currently expanding its operations, which have seen output rise from 69,400 barrels per day (bpd) in April 2018 to around 110,000 currently. An August investment plan ̶ allegedly worth US $3 billion ̶ aims to raise production to 230,000 bpd. However, the expansion has reportedly been halted after a Chinese contractor suspended work, citing unpaid invoices worth US $52 million whileBloomberg reported on Friday that Sinovensa’s blending facilities “have been halted for as much as a week.”

Since taking office in 2017, Attorney General Saab has pursued a wide-ranging anti-graft probe involving PDVSA as well as several subsidiaries, including PetroPiar, Petrowarao, PetroCedeno and PetroMonagas. More than 100 people have been arrested, most of them high ranking executives.

Neither PDVSA, CNPC nor the Maduro government have issued a public statement concerning the Sinovensa case.

Russian investment in “every field”

The latest anti-corruption arrests came as Russian Deputy Prime Minister Yuri Borisov pledged US $4 billion in new investment during the 16th Russia-Venezuela High Level Intergovernmental Commission (CIAN) held in Caracas on Saturday.

“Russia and Venezuela are more united than ever. It is strategic cooperation, with 264 agreements [signed] in multiple areas which seek shared development and sincere fraternity between our people,” Maduro wrote on Twitter after the meeting.

Speaking on behalf of the Putin government, Borisov told reporters that trade between the countries is set to increase ten percent this year to US $150 million annually.

“Venezuela is a very important commercial partner for Russia in Latin America (..) Trade between Russia and Venezuela has increased 24.6 percent in 2018 compared to 2017 (…) and the increasing tendency has been sustained this year,” he said.

Both parties are also working on a long term mutual investment plan to be signed at the next meeting of the CIAN which will extend “at least [to] 2030.”

According to official statements, the new agreements open the way for “the participation of Russian firms in every field of [Venezuela’s] strategic production,” including transport, oil, mining, petrochemicals, and national defence. They also reportedly include the transfer of technology to local industries.

In the health sector, Russia agreed to supply Venezuela with 1.5 million flu vaccines and 5 million other assorted treatments, including insulin, while in agriculture Maduro spoke of “highly advanced projects” that will reportedly be carried out with “the direct presence of Russian investment and technology.” Russian grain exports to Caracas are also due to triple from 254,000 tonnes in 2018 to 600,000 in 2019.

The team of Russian ministerial financial and economic advisors are also due to continue in Caracas, Maduro informed.

The latest meeting of the CIAN follows Maduro’s late September visit to Moscow in which he met with Russian President Vladimir Putin. The Kremlin has been firm in its support for President Maduro in the face of increasing US-led sanctions on the Latin American country. In August, the Donald Trump administration hit Caracas with a general embargo, which authorises secondary sanctions against any US or third party firm, individual or government entity trading with the Venezuelan state and its associated entities.

Edited by Lucas Koerner from Philadelphia and Ricardo Vaz from Caracas.

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