![\"Rosneft_Venezuela.jpg\"](\"\/blog\/wp-content\/media\/images\/Rosneft_Venezuela.jpg\" "\\"Rosneft_Venezuela.jpg\\"")
<\/p>\nBy M. K. Bhadrakumar, IndianPunchline.com<\/p>\n
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The optics of the Russian oil leviathan Rosneft\u2019s decision<\/a> to sell its subsidiary Rosneft Trading SA and sell all its assets in Venezuela after the US Treasury sanctioned its trading arm two weeks ago as part of Washington\u2019s regime change project to oust president Nicol\u00e1s Maduro, may not look good to the uninformed outside observer.<\/p>\n It may appear, prima facie, that Russia is ditching Maduro and succumbing to US president Donald Trump\u2019s latest act of weaponisation of sanctions against the Venezuelan government<\/a>. At least, that was how the BBC Radio\u2019s morning bulletin today projected the development.<\/p>\n But as one digs deeper, it emerges, on the contrary, that the Kremlin is having the last laugh. What Russia is doing is, funnily enough, borrowing from the US diplomatic toolbox \u2014 the equivalent of what the US does constantly in its war on terrorism, that is, whenever a terrorist group that Washington sponsors gets exposed on the battlefield, it gets promptly rebranded and reappears as a new avatar, and life moves on.<\/p>\n So, what is happening needs to be understood as follows: Rosneft is disengaging from its trading arm Rosneft Trading SA, the Geneva-based trading subsidiary, in a deliberate ploy to create a firewall against potential US sanctions in future.<\/p>\n This is important for preserving Rosneft\u2019s global operations \u2014 Rosneft accounts for about 6 per cent of global oil production \u2014 which might otherwise be risking the US sanctions in the downstream.<\/p>\n Rosneft is acting with prudence since, although Rosneft is majority-owned by the Kremlin, it is listed in London, and counts BP and the Qatari sovereign wealth fund as large minority shareholders.<\/p>\n A Rosneft spokesman has ben quoted as saying, \u201cAs a public international company, we have made a decision in the interests of our shareholders in the context of the situation that has objectively developed. Now we have the right to expect from American regulators to fulfil their publicly given promises.\u201d The last reference is to statements from the US that sanctions against its trading arm would be removed if Rosneft wound down its Venezuelan business.<\/p>\n Interestingly, an unnamed company owned entirely by the Kremlin will be buying the Rosneft subsidiary and its oil services and trading operations in Venezuela. The deal between Rosneft (headed by Igor Sechin) and the Kremlin (headed by Vladimir Putin) boils down to the latter now directly taking over assets in Venezuela amounting to more than 80m tonnes in oil reserves and oil production of 66,500 barrels a day via five joint ventures with PDVSA, Venezuela\u2019s state oil company.<\/p>\n A Rosneft subsidiary will receive 9.6 per cent of the company\u2019s stock from the Kremlin in exchange for the assets. That leaves with Trump an only remaining option of sanctioning the Kremlin itself if he wants to punish Maduro.<\/p>\n Moscow honed this innovative technique to outwit Trump\u2019s sanctions earlier also in Venezuela when it rebranded a joint-Russian\/Venezuelan bank facing US sanctions with the Russian joint-venture partners \u2014 VTB and Gazprombank \u2014transferring their shares to the Russian government.<\/p>\n Clearly, the deal between Rosneft and the Kremlin (read between Sechin and Putin \u2014 who are of course longstanding associates in Russian politics through thick and thin \u2014 gives an unambiguous signal that Moscow is in Venezuela for the long haul, no matter what it takes.<\/p>\n The geopolitical implications are hugely consequential for the future of the Maduro government, enhancing Russia\u2019s overall standing in the western hemisphere and highlighting the limits to US hegemony in its own backyard. (Isn\u2019t it Ukraine in reverse order?) The Latin American countries (and China) will be closely watching, too.<\/p>\n Sechin, a former KGB officer himself, has been a key figure in the Kremlin hierarchy who choreographed and founded Moscow\u2019s close relationship with Caracas. He had an exceptionally warm personal friendship with late Hugo Chavez, the self-styled leader of the \u2018Bolivarian Revolution\u2019 in Venezuela. (A 2012 Guardian thumb sketch<\/a> zeroed in on Sechin as \u201cthe head of the Kremlin\u2019s siloviki clan, made up of nationalist hardliners with a security or military background.\u201d)<\/p>\n At any rate, between 2014 and 2018, Rosneft had advanced a loan of $6.5 billion in loans to Chavez to help Venezuela tide over the economic difficulties due to the US\u2019 hostile policies. Venezuela has since mostly paid back the Russian loan in oil deliveries.<\/p>\n Rosneft was marketing between half and two-thirds of Venezuela\u2019s oil and Rosneft Trading SA was Venezuela\u2019s sole supplier of gasoline. The business now will be handled by the unnamed Kremlin company. Evidently, this is a strategic move which signals Russia\u2019s determination to retain its commanding presence in Venezuela\u2019s oil sector.<\/p>\n