At the end of 2015, managers at Rosneft, the Russian state-controlled oil firm, sounded the alarm to their bosses about the company’s investments in Venezuela. Rosneft’s local partner, Venezuelan state oil company PDVSA, owed it hundreds of millions of dollars, according to internal documents, and there seemed no prospect things would get better.

“It will be like this for eternity,” a Rosneft internal auditor wrote in an email to a colleague in November 2015, complaining there was no progress in getting PDVSA to explain a $700 million hole in the balance sheet of a joint venture.


The email was among scores of internal Rosneft communications – including presentations, copies of official letters, memos and spreadsheets – reviewed by Reuters. They cover the firm’s operations in Venezuela between 2012 and 2015.

It was a period when other international oil companies had either quit the country or were freezing new onshore investments, worried about the policies of the populist socialist administration. But Rosneft, majority owned by the Russian state, doubled down, increasing its stakes in joint ventures with PDVSA and lending more, the documents show. Rosneft was standing by its Venezuelan partner just as the Kremlin was supporting leader Hugo Chavez and his successor as president, Nicolas Maduro.

Rosneft has poured around $9 billion into Venezuelan projects since 2010 but has yet to break even, Reuters has calculated, based on Rosneft’s annual reports, its public disclosures and the internal documents.

The Rosneft documents also reveal:

– The Russians believed they were owed hundreds of millions of dollars from their joint ventures with PDVSA.

– Oil output at the joint ventures was far lower than projected.

– The joint ventures struggled to get hold of basic drilling equipment.

– The Russians believed PDVSA spent millions of dollars from one joint venture on “social projects” in a remote area where just a few hundred people lived.

– Managers brought the problems to the attention of Rosneft’s chief executive, Igor Sechin, who ordered measures to right the ship.

Since late 2015, the end of the period covered by the documents, some of Rosneft’s problems have eased because it has taken greater shareholder and operational control of its interests. But it remains deeply invested in a company and a country that are in crisis.

The reason Rosneft kept doubling down on its bet was political, according to two people close to the firm and two others with links to the Venezuela projects. State-owned Rosneft was expected to help prop up Moscow’s allies in Caracas, these sources said.

“From the very beginning it was a purely political project. We all had to contribute,” said an executive at a Russian oil firm that partnered with Rosneft in Venezuela.