The U.S. sanctioned a second subsidiary of Russia’s biggest oil producer, Rosneft PJSC, for allegedly supporting Venezuelan leader Nicolas Maduro.
TNK Trading International SA, a Geneva-based Rosneft subsidiary, was sanctioned for helping transport Venezuelan crude oil, the Treasury Department said Thursday in a statement. In February, Bloomberg News reported that TNK was ramping up planned shipments from Venezuela after sanctions were brought against Rosneft Trading SA, the top buyer of Venezuelan crude last year, for helping sell the commodity that bankrolls the Maduro regime.
After the Bloomberg report, Elliott Abrams, the U.S. special envoy for Venezuela, said the U.S. would react if another company stepped into Rosneft Trading’s role. In the past, the Moscow-based parent company has said the U.S. sanctions are illegal, that its operations in Venezuela are commercial, not political, and that other international companies, including American ones, operate there.
The added sanctions come as a price war between Russia and Saudi Arabia has sent oil prices to the lowest since 2016, eroding Venezuela’s main source of revenue. Oil headed for the biggest weekly decline since 2008 after President Donald Trump said the U.S. would restrict travel from Europe for the next 30 days in an attempt to contain the coronavirus, pummeling fuel demand.
The price war will cut Venezuela’s oil revenue by $6 billion this year, according to consulting firm Ecoanalytica, which estimates 2019 oil revenue was $13.9 billion. Traders buy Venezuelan crude at a discount of about $20 to international benchmarks due to the complications of buying sanctioned oil, according to Francisco Monaldi, a lecturer in energy economics at Rice University’s Baker Institute for Public Policy and an expert on Venezuela’s oil industry.
U.S. President Donald Trump began escalating Venezuela sanctions in 2019 when he endorsed opposition leader Juan Guaido as the country’s legitimate leader. The measures accelerated an ongoing collapse in an oil industry already suffering from years of corruption and mismanagement.
Trump’s State of the Union speech earlier this month was attended by Guaido, and the president promised then to break Maduro’s “grip on tyranny.” Even as the U.S. sanctioned Rosneft Trading and TNK, it has refrained from sanctioning the parent company, a move that’s kept at bay disruptions to the global oil business.
Rosneft took control of TNK Trading in December 2017, according to Rosneft’s disclosures in its International Financial Reporting Standards filing that year. And both TNK and Rosneft Trading are registered in Geneva at the same address, the company’s filings show.