OREANDA-NEWS. Japan's state-backed export insurance agency Nexi has suspended underwriting new insurance for trade and investment in Venezuela as the Latin American producer faces foreign currency shortages amid weaker oil prices.

Nexi will halt issuing almost all new insurance policies for trade deals and investment in Venezuela tomorrow and some comprehensive export credit and buyers' credit insurance by 21 July. The move follows some Japanese trading houses failing to recover around ?20bn (\\$160mn) in payments from Venezuelan firms for their automobile exports.

This is the second insurance suspension implemented by Nexi after Cuba in 2008 since the agency was set up in April 2001. Nexi's measure is expected to affect new trade and investment deals with Venezuela. The value of Japan's exports to Venezuela during the 2014-15 fiscal year ending 31 March totalled ?42bn with imports at ?40bn, according to government data.

But it is unlikely to have a significant impact on Japan's oil imports as imports from Venezuela have been sparse. Japan imported around 11,000 b/d of crude from Venezuela in 2014-15, accounting for just 0.3pc of its total imports. It has not imported any oil products from Venezuela after limited imports of naphtha and LPG in 2010.

Japanese upstream firm Inpex is producing crude and natural gas in Venezuela's Copa Macoya and Guanco Oriental onshore blocks in a joint venture with Venezuelan state-owned oil company PdV. Inpex is also developing the Carabobo 3 heavy oil project in the eastern sector of the country's Orinoco oil belt in a consortium with Chevron, Venezuela's Suelopetrol, Japanese trading house Mitsubishi and Japan's state-owned energy agency Jogmec. Nexi has underwritten insurance for investments by Inpex and Mitsubishi in the Carabobo 3 project.