Venezuela´s state-owned refiner PdV says it has transferred international banking transactions related to its crude oil and refined products exports from Portugal's bankrupt Banco Espirito Santo to Chinese state-owned Citic Bank in Hong Kong.
PdV last week notified international buyers of Venezuelan crude and refined products that all payments for cargoes bought on the open market and through term supply contracts must be made to Citic Bank in Hong Kong, using Deutsche Bank as an intermediary.
Counterparties previously conducted transactions with PdV through the company´s accounts at Banco Espirito Santo, but the Portuguese financial group's collapse last month amid reported losses of over €4bn ($5.35bn) forced the government of Portugal to take control of the privately owned bank's subsidiaries in Luxembourg, Angola and Panama.
PdV was holding about €1.2bn worth of Banco Espirito Santo bonds when the Portuguese group collapsed last month. Portugal's government has pledged to recapitalize and refloat Banco Espirito Santo, but it is not clear if PdV will fully recover its funds.
The decision to shift PdV's commercial banking operations to Hong Kong's Citic Bank highlights the growing importance of China's oil markets and financial institutions to Venezuela's long-term energy and mining investment plans, the energy ministry said.
But PdV's decision to relocate its export-related commercial banking operations to Chinese territory may also be related to the Venezuelan government's efforts to protect the oil company's financial assets from being seized or frozen. The World Bank's International Center for Settlement of Investment Disputes (Icsid) could order Caracas to pay ExxonMobil and ConocoPhillips up to a combined $10bn in compensation for the 2007 expropriation of their Venezuelan upstream assets.
As Argus first reported last month, PdV is already looking to sell its US downstream subsidiary Citgo for $10bn-$15bn, not only to raise cash but also to diminish its legal exposure in the US.
PdV generates 96pc of Venezuela's annual hard currency revenues.
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