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New PDVSA Sought Funding with Unconventional Allies

As if they were pieces of a broken mirror scattered in many islands around the world, several offshore companies form an oil-trading business network that reveals the trajectory of Alessandro Bazzoni and Francisco D'Agostino. Both of them, together with the Venezuelan telecommunications magnate Oswaldo Cisneros, landed in 2016 in the Orinoco Belt to fill the vacancy of the original partner, Harvest Natural Resources.

1/21/2018 3:00:00 AM

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Paradise Papers

"Without a stable market and a fair price, oil investments are difficult," said President Nicolás Maduro in Miraflores, on November 4, 2016. In the televised broadcast, the president broke down, as a trophy, the amount of 10 thousand dollars in private investments announced by Pdvsa, aimed at the Plan Soberano Siembra Petrolera (Oil Sowing Plan), focused on boosting the sharp fall of the state company's production.

A billion of that amount corresponded to Oswaldo Cisneros, the Venezuelan businessman who owns Digitel, who, sitting in front of Maduro, made clear in that afternoon his incursion into the oil world. The presidential assignment was not minor. Cisneros and his share should contribute to triple oil production from wells in Monagas within 5 years.

But Cisneros was not alone there. On the path that led him to the partnership of his company Delta Finance with Pdvsa to promote the creation of the Petrodelta joint venture (of the Orinoco Belt), he was accompanied by Francisco D'Agostino and Alessandro Bazzoni. The former associated with the scandal of the electrical purchases of Derwick Associates with the government of Hugo Chávez, and the later, an unknown Italian businessman.

The signing of the agreement was a surprise to observers of the oil business due to the unexpected incursion of the telecommunications magnate, ignoring the two other entrepreneurs. The case portrays the avid determination of new players, even from other areas, to financially assist Pdvsa and, thus, being part of its businesses by taking the places that traditional partners leave in the country, exhausted from dealing with a declining company and in the midst of a postwar economy

Neither D'Agostino nor Bazzoni have historical records of professional services in the Venezuelan oil industry. However, their personal information appear in company records in Barbados and Malta, according to documents obtained in a leak from law firm Appleby reported by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalism, better known as Paradise Papers.

Asked about his oil investments, D'Agostino, who is a member of Daycohost and a member of the board of directors of Banco Occidental de Descuento, as well as the brother-in-law of opposition politician Henry Ramos Allup, claimed that his oil business, Element Capital, was excluded from the PDVSA contracting system and, therefore, does not maintain business with the state company. 

In the meantime, several of Bazzoni's previous partners in oil financing businesses (Centauro, Chemoil, Saltpond and Imperial Energy Ventures) opened consultations in anti-fraud courts in Texas and New York, targeting Italian offshore companies due to diversion of funds, breach of contract and failure to comply with of jurisdiction agreements. One of them requires compensation for damages of up to 21 million dollars.

From Barbados, the fall of Bazzoni reached New York. On the Caribbean island, the entrepreneur had incorporated a company called Cinque Terre Financial Group, and a judge ordered liquidation thereof  in April 2016 for insolvency and debts. However, the liquidator of Barbados noted that although the liquidation process had begun, Bazzoni opened subsidiaries of the Cinque Terre (peculiarly with the name of CT Energía LTD), both on that island and in Malta.

For the moment, almost nothing is known about the productivity of the alliance between PDVSA and these partners. More than a year after sealing their commitment to boost production, it is a mystery if these unconventional allies who formed Petrodelta contributed to the Oil Sowing Plan.