FT: Venezuela: the Russians are back

January 30, 2013 11:53 am0 commentsViews: 5

The Russians are back in Caracas, but bearing no sweet little black terrier puppies (or similar) from Vladimir Putin for Hugo Chávez this time – not least because he’s not really around to receive gifts.

Although the high-level delegation is ostensibly visiting to attend to business, including major oil investments in the Orinoco Belt, they must also be acutely curious to know what’s up with Venezuela’s ailing leader.

It matters quite a lot. According to Venezuela’s energy minister Rafael Ramirez on Tuesday, Russia will become “our country’s largest oil sector partner” if joint production with Venezuela’s state oil company PDVSA reaches 1.12m barrels per day by 2021 as planned.

The company with most at stake is Rosneft, after it became the leader of the consortium that is participating with PDVSA in the development of Junin 6, one of the largest blocks in the Orinoco, when it bought the 20 per cent stake of another Russian company involved, Surgutneftegaz.

Rosneft’s stake will grow even more with its $55bn acquisition of TNK-BP, which also has a 20 per cent in Russia’s Junin 6 consortium. As if that wasn’t enough, Rosneft also signed a preliminary agreement to develop offshore gas fields that are part of the long-delayed 14.7 trillion cubic feet Mariscal Sucre project.

Rosneft is even now opening a new headquarters in Caracas to manage projects in Venezuela and around the region.

All of this and more explains why Ramirez called Rosneft’s president, Igor Sechin, “a friend of the country”. More accurately, he is a friend of Chávez’s government, which would explain why he must be eager to know how Chávez is – and more to the point, what the prospects of continuing to do business with this government are.

For now, they look reasonable. Even if Chávez has to step down because of his faltering health, there’s a good chance that he will be succeeded by his heir apparent, Nicolás Maduro, if elections are held soon. Whether or not Putin will shower him with puppies too is an entirely different matter.

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