Three U.S. refineries run by a Venezuela state-owned oil company could be turned over to Russia’s PAO Rosneft unless President Donald Trump actively blocks the switch, The Wall Street Journal reports.
Refineries in Illinois, Louisiana, and Texas run by the Venezuela’s Cisgo Petroleum Corp may be turned over to Rosneft as collateral for a $1.5 billion loan the state-owned Russian company paid Cisgo in 2016.
U.S. officials and lawmakers are urging the Trump administration to block the transfer using powers established under laws of national security. The Treasury and State Departments and Congress fear that Russia’s leverage over Cisgo may result in all of Cisgo’s U.S. assets — including nine pipelines and nearly 50 petroleum platforms — falling under Russian control, according to the WSJ.
Cisgo’s parent company, Petróleos de Venezuela SA (PDVSA), is $60 billion in debt with the risk of default growing higher, exacerbated by U.S. sanctions on the Venezuelan economy. Rosneft executives are rushing to find new ways for PDVSA to pay off its debt if Trump blocks Cisgo’s assets from being used as collateral.
One U.S. official blames a lack of Russian foresight for Rosneft’s trouble.
“If they decided to sink in the billions of billions of dollars it would take in Venezuela [to stabilize the country’s finances], that would be a financial decision for them to take and for them to live with the consequences,” a senior U.S. official told the WSJ.
Tensions are building between the U.S. and Russia, with the U.S. ordering Russian embassies in Washington and New York to close by Sept. 2.
“The new steps push our bilateral relations even further into a dead end and contradict other high level announcements,” Kremlin foreign policy aide Yuri Ushakov said, according to Reuters. “There have been words, but there’s no readiness to cooperate yet. This is about further escalating tensions. We regret this and will calmly think about how we might respond.”
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