Venezuela's PDVSA Loses Debt Case in New York Court

A federal appeals court in New York ruled that Venezuela’s PDVSA is unable to use sanctions as an excuse for not paying $348mn in defaulted debt.

• The ruling is a win for the debt holders, Houston-based Dresser-Rand Co., a unit of Siemens AG, and Contrarian Capital Management.
• PDVSA claim they are unable to pay the debt because of sanctions restricting its oil sales.
• In a separate situation, PDVSA officials are readying for the upcoming auction of Citgo Petroleum Corp., Venezuela’s main foreign asset to satisfy other financial claims against the company.
• Sanctions have pushed Venezuela further towards Russia, China, and Iran, weakening Western leverage in the country.
• Last month, China announced it was upgrading its diplomatic ties with Venezuela, and Maduro is also campaigning to join BRICS, an alliance between Brazil, Russia, India, China and South Africa.
• Last year, energy giant Chevron was given the green light to expand operations in Venezuela, and in January, the US granted a license to Trinidad and Tobago to develop a major gas field in Venezuelan waters.
• Questions remain over the impact of easing sanctions on Venezuela due to the large levels of investment its energy sector requires to begin meaningfully increasing volumes onto the market.