What Happened: Venezuelan state-run oil company Petroleos de Venezuela (PDVSA) may begin cutting shipments to China that are used to pay for previous loans in favor of prioritizing shipments to the United States or India, which pay in cash, Argus Media reported Oct. 19.
Why It Matters: PDVSA will not receive any further Chinese loans to raise production from joint ventures if the company defaults further on Beijing's loans. Redirecting oil shipments would be a short-term strategy to free up more cash for pressing necessities such as debt and arbitration payments.
Background: PDVSA must make a $500 million arbitration payment to ConocoPhillips by Oct. 30 or risk the seizure of some of its assets in the Caribbean. PDVSA and the Venezuelan government have already defaulted on $6.4 billion worth of foreign debt payments.
- U.S. Policy on Venezuela Formally Shifting Toward Regime Change (Oct. 4, 2018)
- Venezuela: The Maduro Government Makes a Grab for Oil Revenue (Sept. 11, 2018)
- A $2 Billion Ruling Adds to Venezuela's Woes (May 14, 2018)