Orlen's Venezuelan oil venture turned into hundreds of millions of dollars in losses

Poland's state-backed energy company Orlen's attempt to buy millions of barrels of oil from Venezuela turned into hundreds of millions of dollars in losses and a massive investigation.

Orlen's Switzerland-based trading arm, Orlen Trading Switzerland (OTS), reached an agreement to buy approximately 6 million barrels of oil from Venezuela through intermediaries in late 2023.

The total value of the oil was expected to be approximately $345 million.

However, despite hundreds of millions of dollars being transferred to intermediaries, Venezuelan state oil company PDVSA did not receive the expected payments and almost all of the purchased oil was not delivered.

Polish investigators now assess that at least some of the money was moved through cryptocurrency transactions.

230 MILLION DOLLARS WENT TO THE VEHICLE COMPANY

The deal was made as the United States temporarily eased sanctions on Venezuela's oil sector. During this process, it was reported that OTS sent approximately 230 million dollars to the intermediary company called Hannon International.

Approximately another $100 million was transferred to Horizon Global, another Dubai-based intermediary. However, Venezuela's state oil company PDVSA did not receive the expected payments.

The crude oil that was supposed to be delivered within the scope of the agreement did not arrive. Thus, where and by what methods hundreds of millions of dollars were transferred became the center of the investigation in Poland.

CRYPTO CURRENCY SUSPICION

Polish investigators believe cryptocurrency transactions were used to move at least some of the money.

It is considered that stablecoins such as USDT, whose value is fixed to the US dollar, are used in transactions.

This method allows money to be moved quickly across borders and outside the traditional international banking system.

Venezuela also began using digital assets such as USDT in oil trade after US sanctions restricted its access to the traditional financial system.

TANKERS WAITED FOR OIL

For Orlen, the financial loss was not limited to the money sent to intermediaries.

Tankers were rented to receive oil from Venezuela, but the ships had to wait before loading. According to previous Reuters news, the daily cost of waiting tankers reached approximately 600 thousand dollars.

TOTAL DAMAGE EXCEEDED 400 MILLION DOLLARS

The $230 million payment highlighted in the case does not represent the total loss suffered by Orlen.

When other payments, losses in value and additional costs are taken into account, it is estimated that the total loss arising from Venezuela-related transactions exceeds 400 million dollars.

What happened turned into one of the most remarkable corporate governance crises of recent years in one of Europe's largest energy companies.