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Home / Business / Will Venezuela oil sanctions be silver bullet to shed Maduro regime? | International news

Will Venezuela oil sanctions be silver bullet to shed Maduro regime? | International news



Outside a gas station in eastern Caracas, the queue for fuel for blocks rises. The drivers know that the United States has reached sanctions on Venezuelan state-run oil companies – and they are worried that the pumps will soon dry.

"Everything is going to get worse," said Tomás Pacheco, who was waiting to fill the car. "And these long lines are new to us."

The sanctions, which came on Monday, prohibit US companies from exporting goods or services to PDVSA, as part of a campaign to force Maduro to pull aside and cede power to Juan Guaidó, the opposition leader. US refineries are also excluded from purchasing crude from PDVSA, unless the money is paid into accounts not linked to Maduro.

However, the concern in Venezuela is that the measures will only lead to more suffering in a country that has already been subjected to hyperinflation and chronic lack of foodstuffs and medicine.

"In all my years I've never seen anything so drastic," said Carlos Fuentes, an engineer waiting for gasoline. "If gasoline disappears, it will just be another problem in all this chaos."

Analysts say the goal of the sanctions is to increase people's suffering and trigger even greater protests than those who have rocked Venezuela in recent weeks.

"The United States hopes that the great outbreak will be the silver bullet that eventually kills the Maduro regime," said Geoff Ramsey, assistant director of Venezuela at the Washington office in Latin America. "But as we learned from Cuba, authoritarian regimes can be very resistant."

Opposition protocols have surpassed them in favor of the government, but Maduro has maintained the military's decisive support by offering senior government and PDVSA positions to senior members. The sanctions also aim to hit the kingdoms of the wallet, even though the huge illegal economies they run – from drug trafficking to illegal mining and blackmail – will be unaffected.

"So much money comes out of the ground in Venezuela that finds its way into the regime's pockets, it is difficult to see that these sanctions do much different from increasing the suffering of ordinary people," Ramsey continues.

PDVSA, so For a long time the economic life of Venezuela is unlikely to be the current storm: While the country can have the world's largest proven oil reserves, it has become increasingly burned by fuel shortages due to crumbling infrastructure.

The raw material coming out of the ground is high in Sulfur, which can only be processed into gasoline at certain refineries, with Venezuel's refineries in due course, the oil is sent to the United States and refined there, before being sold back to the troubled nation to meet the demand for pumps. In 2018, US imports rose to 76% to 125,000 barrels per day, according to the US Energy Information Administration.

  A man has a sign reading in Spanish & # 39; r oil in March in support of the state oil company PDVSA in Caracas on Thursday.



A man has a sign that reads in Spanish & # 39; They attack for oil & # 39; in March in support of the state oil company PDVSA, in Caracas on Thursday. Photo: Ariana Cubillos / AP

"This is a company that has been completely mismanaged since Chávez stacked it with loyalists," said Gilberto Morillo, a consultant who served as PDVSA's Chief Financial Officer until 2003, when Hugo Chavez, Maduro's late predecessor, began exercising the company with political facilitator.

Morillo added that Maduro will attempt to judge other buyers in an attempt to alleviate the impending crisis, but these calls are likely to be rejected. "Countries with the right refineries, like India, or countries in Africa, are on the other side of the globe … shipping costs would be great for them."

PDVSA's misery could also isolate Maduro from its top protector, Russia, which invests up to $ 20 billion in Venezuela, experts say, a significant portion of which goes to PDVSA.

Russian energy giant Rosneft has borrowed more than $ 6 billion for PDVSA. The loan is repaid through deliveries of crude oil to Rosneft through 2019, and is dependent on PDVSA's ability to pump oil.

Falling production in Venezuela last year led to reports that Igor Sechin, an influential ally of Vladimir Putin, personally flew to Caracas in November to complain to Maduro and signaled the growing Kremlin's impatience.

The security of part of this loan is PDVSA's 49.9% stake in US refinery Citgo, and new US sanctions against PDVSA may make it difficult for Russia to take ownership in the event of default. Rosneft also has joint efforts with PDVSA on a number of oil fields in Venezuela.

China, another important ally of Maduro, also shows rebellion, while PetroChina plans to scrape a $ 10 billion oil refinery in the southern part of the Asian superpower, Reuters reported Thursday.

While the fuel queues retreat to Caracas, some drivers received sanctions even when preparing for tough times. "Should we suffer? Yes, but they are necessary evil," said María Alexandra Villasuso, a video producer when she filled her vehicle. "The government is already draining, and if the ship sinks, then be it. At some point we will float again."


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