Venezuela’s Oil Giant PDVSA Turns to Crypto amidst Heightened Sanctions

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Due to President Nicolás Maduro’s broken election promises leading to fresh US sanctions in 2023, Venezuela is turning to cryptocurrencies as a solution to cope with economic hardships. According to Reuters, sources close to the matter revealed that PDVSA, the national oil company, is exploring crypto for exporting oil and crude to circumvent challenges.

PDVSA to Use USDT for Oil and Crude Exports

A major Venezuelan oil corporation is now using Tether’s US dollar-backed digital currency, USDT, for transactions instead of holding funds in foreign banks, aiming to reduce the risk of having oil sale proceeds frozen because of renewed U.S. sanctions.

PDVSA’s customers, which include both buyers and sellers, were directed by the US Treasury Department to carry out transactions under a general license that was not renewed due to insufficient electoral reforms prior to May’s end.

The action makes it harder for Venezuela to increase oil output and sales, since businesses must obtain particular American authorizations to deal with the country.

PDVSA intends to keep its business going by switching to cryptocurrencies. This move is expected to shield the company from US interferences that may disrupt its operations, and ultimately provide a seamless experience for its clients.

For the past year, the company has considered utilizing USDT, a stablecoin with a 1:1 correlation to the US dollar value, in their business transactions. Based on Reuters’ latest news, PDVSA intends to enhance its application of digital assets to cope with the renewed sanctions affecting Venezuela’s oil industry.

PDVSA Requires Half Cargo’s Value in Crypto Prepayment

According to Reuters, PDVSA started accepting cryptocurrency payments for specific oil contracts without swaps early this year. Customers are required to pay half of the cargo’s value in USDT upfront.

In addition, it is now necessary for new clients aiming to conduct business with the government-owned oil company to have cryptocurrencies in their digital wallets. This stipulation applies to certain existing agreements as well, which did not originally include the use of USDT.

PDVSA’s move towards using crypto in Venezuela’s oil and gas industry is a sign of the country’s willingness to adopt modern financial technologies in this sector.

According to Venezuelan oil minister Pedro Tellechea’s remarks to Reuters, Venezuela is exploring the option of employing digital currencies in specific oil contract deals.

The Venezuelan oil minister explained that we use various currencies, as outlined in our agreements.

During the time before cryptocurrencies became significant, the oil market primarily used the US dollar as its go-to currency for all transactions, with the settling also taking place in US dollars. This preference originated from the establishment of the “petrodollar” system in the 1970s, which cemented the US dollar’s role as the leading currency for global oil deals.

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2024-04-23 12:51