How Russia sank billions of dollars into Venezuelan quicksand

Russian oil company Rosneft spent a fortune on joint ventures in Venezuela even though it suspected it was losing out on millions of dollars, documents show. It continued investing, sources say, because the Kremlin wanted to support its ally in South America.

By CHRISTIAN LOWE and RINAT SAGDIEV Filed March 14, 2019, 11 a.m. GMT

MOSCOW – At the end of 2015, managers at Rosneft, the Russian state-controlled oil firm, sounded the alarm to their bosses about the company’s investments in Venezuela. Rosneft’s local partner, Venezuelan state oil company PDVSA, owed it hundreds of millions of dollars, according to internal documents, and there seemed no prospect things would get better.

“It will be like this for eternity,” a Rosneft internal auditor wrote in an email to a colleague in November 2015, complaining there was no progress in getting PDVSA to explain a $700 million hole in the balance sheet of a joint venture.

The email was among scores of internal Rosneft communications - including presentations, copies of official letters, memos and spreadsheets – reviewed by Reuters. They cover the firm’s operations in Venezuela between 2012 and 2015.

It was a period when other international oil companies had either quit the country or were freezing new onshore investments, worried about the policies of the populist socialist administration. But Rosneft, majority owned by the Russian state, doubled down, increasing its stakes in joint ventures with PDVSA and lending more, the documents show. Rosneft was standing by its Venezuelan partner just as the Kremlin was supporting leader Hugo Chavez and his successor as president, Nicolas Maduro.

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