The DeLorean materializes on Avenida Bolívar on a sun-drenched 1998 day, leaving flaming tire treads in its wake. It screeches to a halt and out spills a frazzled looking Michael J. Fox, red vest and all, breathlessly muttering: “People of Venezuela, listen to me! You cannot vote for this man! If you do, PDVSA is going to end up being run by ChOP RN-Okhrana-Ryazan!”
That was the scene playing in my mind as I read this baffling, deeply upsetting Reuters piece about PDVSA getting passed around between Kremlin-owned maletín companies like a groupie in the back of a rock star’s limo. If I’m reading it right—which, given the byzantine excess of the corporate structures involved, I may not—the shady Kremlin-backed shell company initially set up to unburden Rosneft of its Venezuela assets, Roszarubezhneft, has now purchased a security contractor from Rosneft named “ChOP RN-Okhrana-Ryazan” and shifted all of Rosneft’s old Venezuela assets to it.
This wouldn’t matter much, were it not for the bizarrely outsized role Rosneft had come to play in the Venezuelan industry. With PDVSA in a state of advanced necrosis, Rosneft had, by late 2019, virtually taken over. Russian managers increasingly made the decisions that mattered in La Campiña, with Rosneft guys in effect taking over PDVSA’s job not just in trading and marketing but in a wide range of other corporate functions, like representing the company in meetings with its other joint venture partners.
The takeover wasn’t ever really announced—nothing is announced in Venezuela these days—so public opinion never really got the memo. If you follow these things, you sort of know that PDVSA has now lost so many engineers, managers and technicians it wasn’t really operating like a normal oil company would anymore, and you’d likely intuited that its reliance on outside partners had grown considerably. What we had been hearing went well beyond that, amounting to a kind of sotto voce takeover that no one talked about and whose implications no one had quite grasped.
This wouldn’t matter much, were it not for the bizarrely outsized role Rosneft had come to play in the Venezuelan industry.
Which is why Rosneft’s decision to leave Venezuela at the end of last year was so transcendent… and so confusing. Since nothing is ever announced and information flow in and out of the industry is so sluggish, it was hard to figure out how much of the play was down to a change in strategy, how much was aimed at shielding Rosneft from the impact of American sanctions, how much was purely a commercial play cutting exposure to a high-cost producer at a time of low prices, and, above all, how real the move was. Were the same Rosneft engineers going to keep turning up to their same jobs in Venezuela the next day but draw a salary from a different entity? Or was the pullback real?
We’re still not entirely clear on it. It’s been an enormously disorienting experience trying to piece it all together. Russia is as opaque as Venezuela has become. Information drips out in tiny shards: analyzing it feels like trying to put together a 5,000 piece jigsaw when you’re missing 4,800 of the pieces. Was the intention ever to make Roszarubezhneft a real operator? Does its takeover of a spun-off ChOP RN-Okhrana-Ryazan and its decision to shift its Venezuela assets to it signal more real cooperation, or less? Is ChOP RN-Okhrana-Ryazan a real company in the first place? Is the move a sign that the Kremlin is ceding space to the Iranians and the Chinese, or trying to claw it back from them?
We don’t know. We may never know.
What we do know is that the PDVSA brand had become too toxic even for Rosneft, a company with a reputation for ethics that would make Jack The Ripper blush. And we know that after two decades of paeans to the revolution’s reassertion of Venezuelan sovereignty over Venezuelan oil, we’ve come full circle and shoved off the smouldering rubble of the oil industry to the effective control of a security contractor from an unfashionable provincial town two hours south of Moscow.
Ahora ChOP RN-Okhrana-Ryazan es de todos.
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