Rosneft hands Venezuelan oil business to Russian state firm

Russia’s Rosneft oil company said Saturday that it's halting operations in Venezuela and selling its assets there to a company fully owned by the Russian government, a move apparently intended to protect Russia's largest oil producer from U.S. sanctions while Moscow continues supporting Venezuelan President Nicolas Maduro.

The sale follows the United States imposing sanctions on two Rosneft subsidiaries in an effort to cut a critical lifeline Russia extended to Maduro after the U.S. government made it illegal for Americans to buy crude from Venezuela.

Rosneft, led by Russian President Vladimir Putin's longtime associate Igor Sechin, said that its move means that “all assets and trading operations of Rosneft in Venezuela and/or connected with Venezuela will be disposed of, terminated or liquidated.”

It said in a statement that it “concluded an agreement with the company 100% owned by the government of Russian Federation, to sell all of its interest and cease participation in its Venezuelan businesses, " including multiple joint ventures, oil-field services companies and other activities.

The sale could help shield Rosneft by handing over control over the Venezuelan operations to a fully state-owned venture that unlike the state-controlled Rosneft isn’t answerable to private investors.

In February, the U.S. Treasury Department imposed sanctions on the Rosneft subsidiary based in Geneva that sells crude to European customers. U.S. authorities vowed to keep applying pressure, and hit a second Rosneft subsidiary with sanctions earlier this month.

Rosneft spokesman Mikhail Leontyev said the company's decision was aimed at "protecting the interests of our shareholders." He added in remarks carried by Russia's Tass news agency that Rosneft expects the U.S. to now waive sanctions against its subsidiaries.

"We really have the right to expect American regulators to fulfill their public promises,” he said.

Konstantin Kosachev, the Kremlin-connected head of the foreign affairs committee in the upper house of Russian parliament, reiterated that Russia's view is that “unilateral U.S. sanctions against Venezuela are unlawful and inhumane.”

"Moscow and Caracas will remain partners amid the U.S. sanctions against Venezuela," he told the Interfax news agency.

The U.S. was first among nearly 60 nations to recognize opposition leader Juan Guaidó a year ago as Venezuela's rightful leader. The international coalition considers Maduro illegitimate after 2018 elections widely deemed fraudulent because the most popular opposition candidates were banned from running against him. Russia's support has helped Maduro to face down U.S.-backed efforts to unseat him.

Rosneft said in its statement that “the concluded transaction and the sale of assets will result in Rosneft receiving as a settlement payment a 9.6% share of Rosneft’s equity capital that will be held by a 100% subsidiary of Rosneft and accounted for as treasury stock.”