A default by Petroleos de Venezuela on its debt would likely hamper oil production, leading to tighter food supplies and stirring up further unrest in Venezuela.
Venezuela has reached a critical point. To avoid default, state oil and gas company Petroleos de Venezuela (PDVSA) must make $3 billion in foreign debt payments over the next two months, and the government is scrambling to find the cash to do so. Although Venezuela has long lived with the risk of default on foreign debt, reports have surfaced that Caracas has yet to seal agreements for loans it will need to make the payments — both those due soon and for the remainder of the year. PDVSA has for months been negotiating the terms of a loan from Russian oil company Rosneft — a deal collateralized by Venezuelan bonds that would give Rosneft a stake in a joint oil venture in the country. There is also a reported $500 million loan deal that the country is negotiating with U.S. investment fund Fintech Advisory Inc.
