CARACAS: Japan’s government-backed export insurance agency said it has stopped writing insurance for trade and investment in Venezuela after facing potential claims of about $160 million from trading houses to recover payments for auto exports.
Venezuela has struggled with foreign currency shortages after falling oil prices hit export earnings.
The measure will have no impact on Japan’s imports from Venezuela, an official with the Nippon Export and Investment Insurance (NEXI) said on Tuesday. Japan imported only 7,806 barrels per day of oil from Venezuela in 2014, accounting for about 0.2 percent of total crude imports, according to Japanese trade ministry data.
Japan’s Inpex Corp, Mitsubishi Corp and state-run Japan Oil, Gas and Metals National Corp are involved in Venezuela’s Carabobo 3 heavy oil development project. But because the project has already received NEXI insurance, there is no impact on the project, an Inpex spokesman said.
NEXI said it will stop issuing most insurance policies for trade and investment deals in the Latin American oil exporter from Tuesday and end all new underwriting from July 21.
Trading houses shipping automobiles and parts to Venezuela have lost 20 billion yen ($162 million) in payments, the NEXI official said, although it wasn’t clear over what time period the losses occurred.
NEXI has already paid 12.5 billion yen to one trading house and if payouts hit 20 billion yen, that would be the most the agency has lost on a single country, the official said.
The cutoff is the second time the insurance agency has stopped writing insurance on a country after it suspended coverage for Cuba in 2010, the NEXI official said.
Two way trade between Venezuela and Japan totalled 66.4 billion yen in 2014.
