United States Sanctions Break Chávez-China Company

CV Shipping was a company founded by Hugo Chávez in 2008 when China was looking to strengthen its ties with Venezuela.

According to Reuters, the transfer occurred after U.S. sanctions against PDVSA left the vessels uninsured (@Comunictian).

CV Shipping Pte Ltd (CVS), a joint venture between Venezuela and China, filed for bankruptcy after U.S. sanctions took effect- a move that also left PDVSA without three of its large oil tankers.

A Reuters report revealed that the state oil company PetroChina Co Ltd took control of three Venezuelan oil tankers, according to a Singaporean court order.

According to Reuters, the transfer occurred after U.S. sanctions against PDVSA left the vessels uninsured, resulting in millions of dollars in losses for CV Shipping and leading to PetroChina’s bankruptcy.

Reuters explains that Singapore law requires ships to have insurance to set sail, and the fact that the insurer stopped providing the service to avoid penalties meant that the company could not operate.

CV Shipping was a company founded by Hugo Chávez in 2008 when China was looking to strengthen its ties with Venezuela.

According to the report, the company was left without insurance to operate. Further, its accounts were frozen. Consequently, a legal dispute was initiated for the owners to divide the assets.

PetroChina then requested that CVS be placed in liquidation, a measure quickly authorized by the Singapore courts. The appointed liquidator proposed an auction of the tankers and requested evidence of sufficient funds, which PDVSA said it could not provide due to the sanctions. The ships Junin, Boyaca, and Carabobo are now owned by China.

It should be remembered that in October 2019, it was revealed that the Chinese giant Huanqiu Contracting and Engineering Corp. (HQC) also finalized agreements with the Venezuelan state oil company PDVSA.

Bloomberg reported that the Asian country’s main contractor was forced to terminate agreements with its suppliers in oil projects in Venezuela due to PDVSA’s non-payment.

While China has become a kind of “financial lifeline” for Maduro, it is clear that its priority is to take care of its business and trade relations. Despite its political support for the dictatorship, China has decided to guard against imminent financial sanctions. However, it still has to deal with the regime’s multi-million dollar debts to the Asian country.

China has become Venezuela’s principal financial partner, granting the dictatorship millions in loans, which are paid for with oil shipments. A study by the Kiel Institute for the World Economy revealed that Venezuela is the country in the Americas that owes the most money to the People’s Republic of China, to such an extent that its debt exceeds a quarter of its own Gross Domestic Product (GDP)- some twenty billion dollars.

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