Venezuela oil Co. expands digital currency use amid US oil sanctions

By Al Mayadeen English
Source: Agencies
22 Apr 2024 22:42
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While the global oil market predominantly operates in US dollars, PDVSA's move towards digital currencies signifies a departure from traditional payment methods.

The US Treasury Department's decision to not renew a general license has prompted PDVSA to accelerate its transition towards digital currency, particularly USDT (Tether), which is pegged to the US dollar (AFP)

Venezuela's state-run oil company PDVSA is set to expand its use of digital currency for crude and fuel exports in response to renewed oil sanctions imposed by the US, Reuters reports, citing three sources familiar with the matter.

The US Treasury Department's decision to not renew a general license has prompted PDVSA to accelerate its transition towards digital currency, particularly USDT (Tether), which is pegged to the US dollar. This shift aims to mitigate the risk of frozen proceeds in foreign bank accounts due to the sanctions.

"We have different currencies, according to what is stated in contracts," Venezuelan Oil Minister Pedro Tellechea said, noting that digital currencies might become the preferred payment method in some contracts.

While the global oil market predominantly operates in US dollars, PDVSA's move towards digital currencies signifies a departure from traditional payment methods. The company has been gradually integrating digital currency transactions since last year, with a significant increase following the recent oil sanctions.

PDVSA's strategy includes requiring prepayment in USDT for half of each cargo's value in spot oil deals, as well as mandating new customers to hold cryptocurrency in a digital wallet, even in contracts where it was not previously specified.

However, the transition to digital currencies presents challenges, as it requires the involvement of intermediaries due to compliance issues. Despite this, PDVSA is determined to navigate through the sanctions by relying on trading partnerships and exploring alternative avenues for oil sales, particularly to China.

While the impact of the sanctions on Venezuela's oil output and revenue remains uncertain, Minister Tellechea expressed confidence in PDVSA's trading capabilities and its ability to adapt commercially to the challenges posed by the renewed sanctions.