Venezuela's state oil company PDVSA is accelerating its transition to using digital currency for crude oil and fuel exports in response to the US re-imposition of oil sanctions.
The recent decision by the US Treasury Department not to renew the general license for transactions with PDVSA, citing a lack of election reform, has led the company to accelerate its move to digital currencies such as USDT, also known as Tether. This strategy is intended to minimize the risk of Venezuelan sales proceeds being frozen in foreign bank accounts due to sanctions.
Venezuelan Oil Minister Pedro Tellechea, in a statement last week, mentioned that different currencies are being used as stipulated in the contract, with digital currencies sometimes being the payment method. like.
Traditionally, the US dollar has been the dominant currency for transactions in the global oil market, and while cryptocurrency payments are emerging in some regions, they are still infrequent.
PDVSA's move toward cryptocurrency was marred by a corruption scandal last year that revealed about $21 billion in unaccounted receivables for oil exports, some of which were tied to previous cryptocurrency transactions. Despite this setback, under Tellechea's leadership, Venezuela's oil exports increased to about 900,000 barrels per day in March, marking a four-year high.
PDVSA has now modified many spot oil trades to a contract model that requires up-front payment of half of the commodity value in USDT. Furthermore, the company required new customers interested in oil trading to own cryptocurrency in a digital wallet, a requirement that was retroactively applied to some existing contracts.
During the six-month licensing period granted by Washington in October, allowing for the resumption of trade with Venezuela, many traders and former PDVSA customers used intermediaries to meet digital trading requirements. . One trader highlighted the compliance challenges of USDT transactions in the oil industry, highlighting the reliance on intermediaries to facilitate these payments.
Venezuela has become increasingly dependent on middlemen, especially for oil sales to China, since the US imposed secondary sanctions in 2020. Although this approach can help circumvent sanctions , but it resulted in a reduction in the share of oil proceeds going to PDVSA.
Despite the challenges predicted after the 45-day period set by the US, Minister Tellechea expressed confidence in PDVSA's trading capabilities and stated that the company plans to continue signing contracts and expanding crude oil and gas projects. He also advised potential customers to seek specific licenses from the United States after the shutdown.
Oil analysts predict that Venezuela's oil production, exports and revenues could face restrictions even with individual authorization from Washington. However, Tellechea rejected this view, affirming PDVSA's commercial readiness to deal with the re-implementation of US sanctions.
