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Page added on December 8, 2017
China sues Venezuela’s oil company over unpaid bills
China is turning up the heat on Venezuela.
One of its biggest state-owned companies has filed a lawsuit against Venezuela’s oil company, PDVSA, in a U.S. court, claiming millions of dollars it says it is owed.
Chinese oil and gas company Sinopec is suing PDVSA for $23.7 million plus interest and damages, accusing the Venezuelan company of breach of contract and conspiracy to defraud.
According to court documents filed on Nov. 27 in Houston, Texas, Sinopec USA claims that PDVSA has failed to pay for half of a $43.5 million order for steel products. The lawsuit was first reported by the Financial Times on Wednesday.
The disputed amount is small when compared to the massive debts Venezuela is struggling to repay.
Venezuela and PDVSA owe more than $60 billion just to bondholders. In total, the country owes $196 billion, according to a paper published by the Harvard Law Roundtable.
China’s state banks loaned $60 billion to Venezuela between 2007 and 2016, and the lawsuit is just the latest sign that Beijing is growing impatient with the embattled South American country.
Sinopec doesn’t hold back in its complaint, slamming PDVSA for its “disingenuous nature [and] feigned promises to make full payment.”
It alleges PDVSA “hid behind a complicated series of subsidiaries and affiliates,” detailing how various PDVSA-affiliated companies “were acting in concert to defraud Sinopec.”
PDVSA could not be reached for comment outside of business hours.
Paying Sinopec’s bill is far from the most pressing matter facing Venezuela.
The country is suffering a massive humanitarian crisis. There is a severe shortage of food and medicine. Many Venezuelans can’t buy basic items because prices are skyrocketing. The country’s currency, the bolivar, is worth less than a tenth of a U.S. penny, and the central bank has less than $10 billion left in reserves.
PDVSA made a $1.1 billion debt payment last month. Shortly after, Venezuelan President Nicolas Maduro said that Venezuela and PDVSA would seek to restructure their debt payments.
5 Comments on "China sues Venezuela’s oil company over unpaid bills"
Davy on Fri, 8th Dec 2017 6:32 am
This is just the beginning of China’s realizations of bad debt both internal and external. This is another reason the BRI is fantasy at the level of the Chinese hype. It will likely happen but the original goals hyped now are likely fantasy. If the economy declines and more nations become indebted then investments will not bring the return of the original negotiations. When you have a country like China that has grown beyond any other country in man’s history the losses are very large. It is the nature of big numbers. Venezuela is likely a big bad debt for Russia and China. They will pay a price for their hubris. The US will likely pay a price too if the Venezuelan crude the US is accustomed to declines significantly. Venezuela is going to have a bigger impact on the global economy than many realize. Venezuela is a peak oil dynamic and it will not be put to bed.
Shortend on Fri, 8th Dec 2017 8:29 am
Wait until they sue Uncle Sam for his bad debt. Oh, That’s why Trump is downsizing National Monuments, to provide more capital on bad loans…brilliant!
Perry on Sat, 9th Dec 2017 2:18 pm
I lived and worked in Ven for ten years. Up to 2011. The writing was on the wall then as the currency dropped in value every day. China jumped in with both feet so did Russia, as the Americans were being ousted. Greed. That got them all. Cannot feel sorry for any of them.
peakyeast on Sat, 9th Dec 2017 6:05 pm
Maduro “If you just loan us some more – then we can pay the debt to you.”
Boat on Sun, 10th Dec 2017 8:48 pm
Davy,
The US does not need oil from Venezuela other than refine it and flip it for refinery profit. Canada is a different kettle of fish. Of the 4 mbpd the US actually needs Canada supplies 3.4 mbps.