Venezuela backs Petro with 30m barrels of oil from 5bn

22 Nov 2019

Venezuela is planning to back its national oil-pegged digital currency, Petro with 30 million barrels of crude oil.

According to Venezuelan President Nicolas Maduro, the oil inventories are in the country’s storage tanks, ready for immediate commercialization to serve as a “liquid, physical, material backing” for the Petro, says a Coin Telegraph report.

Maduro made the announcement this week on state television, reports Reuters, with the president defining Petro as a “sovereign Venezuelan crypto asset.”

Although Maduro has not offered any further information as to how the sale of oil inventories would function in backing the Petro, the government initially planned to back the digital currency with five billion barrels of oil.

The Reuters report went on to say that the steep fall in quantity of Petro’s backing was due to U.S. sanctions on Venezuelan state-owned oil company PDVSA.

The company reportedly reduced crude extraction this year because of the sanctions.

Local government has been heavily promoting Petro in recent weeks. Earlier this week it was announced by Maduro that retirees and pensioners in the country will receive their Christmas bonus in the cryptocurrency.

A number of similar initiatives have occurred previously, as Venezuela allegedly automatically converted pensioners’ monthly bonus into Petro at the end of last year.

Introduced in February 2018, the Petro is the world’s first national oil-pegged digital currency, designed to attract overseas investment and sidestep U.S. government sanctions.

Before the Petro was launched, Maduro ordered 100 million Petros to be issued with the value of a single barrel of oil each in January 2017, says Coin Telegraph.

Although the Venezuelan president instructed Banco de Venezuela to begin accepting Petro in July this year, it is reportedly not as yet used in Venezuela.