Two days ago, the U.S. Justice Department announced it had seized Venezuelan President Nicolas Maduro’s Falcon 900EX plane, citing a possible breach of U.S. export control and sanctions laws. Washington claims the plane was illegally purchased for $13 million and allegedly acquired through a Caribbean-based shell company. The seizure of the plane is an ironic twist in Maduro’s crypto schemes to circumvent Western sanctions, having previously declared it legal to purchase jet fuel using Venezuela’s controversial oil-backed cryptocurrency, the petro.
Six years ago, Maduro unveiled the infamous petro cryptocurrency under the so-called PdVSA-Crypto scheme. With Caracas strangled by Washington's economic sanctions, Maduro launched Petro as a last-ditch attempt to raise cash, vowing that Petro would "allow new forms of international financing." The embattled president revealed that 100 million Petro tokens worth around $6 billion would be issued. The petro was to be backed by Venezuela’s vast oil reserves, prompting the Venezuelan parliament to label it an illegal attempt to mortgage the country’s oil. Not to be confused with Signal Capital Management’s re-launched (and genuine) crypto the PetroDollar (XPD), Venezuela’s petro crypto was valued at $60 or 3,600 sovereign bolivars, each. As part of commodity-backed cryptos, Petro was probably doomed to fail, mainly due to trust issues. Whereas Venezuela is home to the world’s largest oil reserves, few believed Maduro’s government would keep its word and actually maintain the necessary reserves to backstop the petro.
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It, therefore, did not come as a surprise when the petro crypto was shattered in January 2024 and all holdings liquidated amid poor adoption and corruption scandals. Petro’s darkest hour came after officials from PDVSA, the state-owned oil company, sold crude shipments and received payments of up to $20 billion in cryptocurrency and other fiat currencies channeled through Sunacrip, the national cryptocurrency watchdog. However, these funds were never reported to the national treasury. This resulted in the arrest of former PDVSA President Tareck El Aissami and former Sunacrip head Joselit Ramirez. Further, Sunacrip was forced to enter a restructuring period over a year ago. But Venezuela’s crypto crisis did not end there. Back in May, the country’s National Power Ministry seized over 17,000 mining machines in a bid to lower power consumption as the country went through constant blackouts, forcing hundreds of crypto miners to pull the plug on operations.
Venezuela Sanctions To Continue
The seizure of Maduro’s plane comes just two months after the United States Office of Foreign Assets Control (OFAC) eased some sanctions on Venezuela but retained sanctions on PdVSA. OFAC issued a new license allowing certain transactions related to the export or re-export of liquefied petroleum gas (LPG) to Venezuela until July 8, 2025. However, transactions with Petróleos de Venezuela, S.A., the Venezuelan state-owned oil and natural gas company in which PdVSA has a 50 percent or greater interest, remain prohibited under the sanctions imposed by various executive orders. The previous general license permitted transactions related to oil or gas sector operations in Venezuela but expired on April 18. Back then, Washington's position was that Venezuela President Nicolas Maduro and his representatives had failed to fully meet the obligations outlined in the electoral roadmap signed with the opposition in Barbados in October 2023.
Well, that was before Venezuela’s disastrous presidential elections, meaning it’s highly unlikely that the U.S. will Venezuela’s oil sanctions any time soon.
In last month’s elections, Maduro and his representatives tampered with the results of the election, falsely claimed victory, and carried out widespread repression to maintain power. Washington acknowledges that opposition contender Edmundo González Urrutia received the most votes, noting that the Maduro-controlled National Electoral Council (CNE) has failed to substantiate its announced results by producing original tally sheets, as it did following the 2013 and 2018 elections despite repeated calls from Venezuelans and the international community. A judge in Venezuela has even issued an arrest warrant for the 75-year-old Gonzalez, a former diplomat, for allegedly failing to appear three times to answer questions on charges including conspiracy and falsifying documents in relation to the election.
The sanctions have been inimical to Venezuela’s oil sector: Venezuela's crude oil production has declined sharply from 3.2 million b/d in 2000 to 735,000 b/d currently mainly due to export restrictions and poor maintenance. In contrast, crude output by neighboring Argentina has been increasing with libertarian President Milei vowing to shake up the system.
By Alex Kimani for Oilprice.com
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