In the latest bombshell to hit President Trump, Bloomberg reports his administration may have inadvertently taken money from an enemy of the U.S. - but this time it's the Syrian government of President Bashar al-Assad... via Venezuela.
In a report published Thursday, Bloomberg alleges that Citgo officials were involved in a plot to illegally disguise Syrian crude and sell it at gas stations in the U.S..
Citgo, the U.S. arm of Petroleos de Venezuela, the country's state-owned oil firm, controversially made a $500,000 donation to Trump's inauguration fund, which Bloomberg noted was larger than donations from other U.S. corporations.
With oil production in Venezuela seemingly on the brink of collapse, Venezeulan officials allegedly entered into a conspiracy to help disguise the source of Syrian crude, allowing the troubled Socialist "republic" to sell the oil below market price and reap higher profits. The plot was allegedly organized by a Venezuelan oil trader who was Bloomberg's main source for the story.
Wilmer Ruperti, the trader in question, acknowledged his participation in the scheme during a phone interview, Bloomberg reported. Ruperti said he no longer has a role in the scheme, and Bloomberg reported that it’s unclear whether the operation is ongoing. Ruperti says Syrian officials approached him in early 2012 during a party at the Syrian Club of Caracas.
Unsurprisingly, there's a Russian angle to the story, too.
With Venezuela’s government bleeding revenue, Petroleos de Venezuela year used just under half of its Citgo shares as collateral for a loan from Rosneft, according to a Nov. 30 financial statement filed in Delaware. A group of U.S. senators recently noted that, thanks to Rosneft’s recent purchase of bonds for the troubled oil company on the open market, the Russian oil giant could wind up controlling Citgo should Petroleos de Venezuela default.
After agreeing to participate in the scheme, Ruperti had begun renting a guest house on Aruba’s northern coast to scout out a refinery when he met a local realtor, Oscar Helmeyer, who played a small role. With Helmeyer's help, Ruperti tried to arrange the purchase of a massive oil refinery that had been recently shuttered by San-Antonio based Valero Energy Corp. Helmeyer told Bloomberg that Ruperti also met with top Aruban officials, including Prime Minister Mike Eman.
The refinery was eventually leased by Petroleos de Venezuela.
Ruperti detailed some of the alleged plot in a letter to then-Syrian ambassador to Venezuela Ghassan Abbas. In the letter, Ruperti suggested forming a business group called “Sirius Venezuela” and recommended a five-year contract to supply 50,000 to 200,000 barrels a day of Syrian crude, as well as storage capacity for another 6 million Syrian barrels.
Beneath his signature, Ruperti included the slogan:
“Socialist fatherland, we will win and we will live.”
According to Bloomberg, the scheme eventually involved a “chain of communication” between Syrian and Venezuelan officials that included several executives of Houston-based Citgo Petroleum Corp., the U.S. based subsidiary of Venezuela’s state-owned oil company.
In a September 2012 letter to Syria’s then-ambassador to Venezuela, Ghassan Abbas, Ruperti said the point of the scheme would be to:
“avoid the boycott that has been implemented by United States of America and the European Community.”
Though he later told Bloomberg that the purpose of the scheme would be “to make a lot of money.”
For Venezuela, Bloomberg asserted that the plot forms part of an international agenda initiated by the late socialist President Hugo Chavez that has made the country an ally of Iran and Cuba.
But politics aside, it’s clear why South America’s largest oil exporter jumped at the deal: As Bloomberg reports, Venezuela is desperate for cash after years of government mismanagement drove oil output to a three-decade low, plunged the economy into a depression and fueled weeks of deadly nationwide protests.
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As of April, oil production stood at 1.956 million barrels per day (mb/d), down 10 percent from last year, and down more than 17 percent from 2015 levels - and output continues to trend downward. James Williams, energy economist at WTRG Economics, told MarketWatch in March that he expects Venezuela to lose another 200,000 to 300,000 bpd this year, another 10 to 15 percent decline from 1Q2017 levels.
Venezuela's precarious situation has been made even more exasperating due to the drop in crude oil prices that followed Thursday's announcement of a nine-month production cut deal extension, an attempt to bring the global oil market back into equilibrium. Unfortunately, the market was disappointed that certain non-OPEC producers (U.S. shale) won't be a party to the deal.