Venezuela’s state-owned oil and gas company PDVSA has unveiled plans to expedite the use of cryptocurrency, particularly USDT, to evade US sanctions. The company initiated the integration of USDT for oil sales back in 2023 and has now introduced a new policy requiring new customers to possess a digital wallet containing cryptocurrency.
The decision to accelerate USDT usage for crude and fuel exports comes in the wake of the United States’ refusal to renew a general license that temporarily eased sanctions on Venezuela’s oil and gas sector. The general license, issued in October after a commitment by President Nicolás Maduro to hold free and fair elections in 2024, allowed Venezuela to increase its oil exports to 900,000 barrels per day in March. However, with the US opting not to renew the license due to perceived non-compliance with the promised elections, sanctions have been reimposed.
Impact on Oil Exports
PDVSA customers and providers now have until May 31 to conclude transactions, potentially impeding Venezuela’s ability to export oil. In response to the reinstated sanctions, PDVSA aims to boost the use of USDT, which it started accepting for transactions the previous year, to mitigate the risk of having profits frozen in foreign bank accounts.
In the first quarter of 2024, PDVSA shifted non-swap spot oil deals to a new contract model necessitating that half of each cargo’s value be prepaid in USDT. Additionally, the company is compelling new customers to possess a digital wallet containing cryptocurrency, extending the requirement to older contracts that did not specify the use of USDT.
Challenges and Criticisms
While the use of cryptocurrency for oil and gas transactions is atypical, given the dominance of the US dollar in global markets, PDVSA’s reliance on intermediaries to facilitate USDT transactions may impede oil proceeds for the company. This strategy marks Venezuela’s second attempt to leverage cryptocurrency to bypass US sanctions, after the unsuccessful introduction of the state-owned, oil-backed Petro in 2018, which was met with limited adoption and widespread criticism.
Venezuela’s PDVSA’s decision to accelerate the use of cryptocurrency, particularly USDT, in response to renewed US sanctions underscores the evolving strategies adopted by countries to navigate economic restrictions. While the move may offer a temporary reprieve from frozen assets, it also comes with challenges and criticisms that could impact the company’s revenue in the long run.
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