Chinese Oil Company Sues Venezuela’s PDVSA, Deals Strong Setback to Maduro’s Dictatorship

Sinopec’s lawsuit against PDVSA shatters illusions about a still solid relationship between Venezuela and China. (Minci)

Sinopec USA INC., a subsidiary of a major Chinese state-owned oil company, has sued the also state-owned Petr√≥leos de Venezuela (PDVSA) in a US court for USD $23.7 million “plus punitive damages” according to the¬†Financial Times. The British daily adds that the lawsuit is over a “2012 contract to supply steel rebar for $43.5m, half of which (Sinopec USA) says remains unpaid.”

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Venezuelan economist Jos√© Toro Hardy reacted on his Twitter account by writing: “those who thought that China would refinance Venezuela’s debt are about to be shocked: China is suing PDVSA.”

Miguel √Āngel Santos, a Harvard economist, also took to Twitter to write that Sinopec “filed a ‘Request for Arbitration'” at the International Chamber of Commerce against PDVSA.

The¬†Financial Times‘s Jonathan Wheatley adds that the lawsuit “reveals a breakdown in relations of a far greater order. Sinopec agreed in September 2013 to invest $14bn in a Venezuelan oilfield, according to Rafael Ram√≠rez, Venezuela‚Äôs oil minister at the time.”

Wheatley further writes that, according to Sinopec, PDVSA’s actions ‚Äúconstituted intentional misrepresentations, deceit, and concealment of material facts… wilful deception‚ÄĚ and conspiracy.

As Toro Hardy points out, China was perceived to be one of Venezuelan dictator Nicol√°s Maduro’s few remaining solid allies. After Sinopec’s lawsuit, attention will turn to Russia, whose President Vladimir Putin has expanded the country’s interests in Latin America and could still prop up Maduro’s regime as the Venezuelan economy continues to collapse as an inevitable consequence of “21st Century Socialism”.

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