Venezuela’s Petro Currency Will Be Worth a Barrel of Oil

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Venezuelan President Nicolás Maduro/TIP

The Petro, virtual currency that Venezuela wants to create to fight against the “financial blockade” of the United States, will have a value equivalent to that of a barrel of oil, announced the president Nicolás Maduro.

“For each Petro, a barrel of oil, that’s its value,” said Wednesday the Venezuelan president without giving details on the date of the launch of this cryptocurrency or the mechanism to will carry out transactions with the currency.

The barrel of Venezuelan crude ended last week at 56.57 dollars, according to the Ministry of Oil. The average price in 2017 was 46.45 dollars after 35.15 dollars the previous year.

President Maduro announced on Dec. 3rd the creation of the Petro, which, he assured, would be based on the oil wealth of Venezuela whose reserves are among the largest in the world.

On Wednesday, the president pointed out that the virtual currency would be backed by the fields of the Orinoco, a mining region of 31,000 square miles in the south-east of the country that cofntains a huge reservoir of heavy and extra-heavy crude.

“I will officially announce the designation of the number one field of the Ayacucho bloc (…) so that it becomes the base of material support of this petrocurrency”, said Mr. Maduro, stating that the deposit contained reserves of 5 billion barrels of oil “internationally certified”.

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By launching its initiative earlier this month, the government had ensured that Petro would “advance to new forms of international financing” against US financial sanctions. Washington prohibits its citizens and businesses from buying bonds from Venezuela and its state oil group PDVSA.

Commenting on Maduro’s Twitter ads, an economist, Luis Oliveros, said Petro was “not a cryptocurrency but a debt, backed by an asset: oil.”

Venezuela, troubled by the fall in the price of oil from which it draws 96% of its income, is forced to restructure an external debt estimated at about $ 150 billion by some experts.

The country and its oil company PDVSA are already considered to be partially in default by several rating agencies. The population suffers from severe shortages of food and medicine because of lack of money to import them.

Abbad Farid

Abbad holds a degree in Journalism from the University of Cumbria and covers mostly world news for The Talking Democrat