CARACAS (Reuters) - Venezuela’s state-owned oil company PDVSA is preparing to pay holders of its 2020 bond some $950 million this month, after failing to make interest payments on most other bonds this year, sources at the company and in the local financial sector said.

FILE PHOTO: FILE PHOTO: Venezuela's Oil Minister and President of the Venezuelan state oil company PDVSA Manuel Quevedo gestures as he talks to the media during a news conference in Caracas, Venezuela, August 7, 2018. REUTERS/Marco Bello/File Photo/File Photo

PDVSA has fallen behind on more than $7 billion in principal and interest payments since the end of 2017, according to market sources and Refinitiv data, as an economic crisis in Venezuela has worsened.

But cash-strapped PDVSA has stayed current on the 2020 issue, which is backed by 50.1 percent of shares in U.S. refining network Citgo.

“Quevedo gave his approval to arrange this payment,” said one person at PDVSA familiar with the plans, referring to Manuel Quevedo, Venezuela’s oil minister who is also president of PDVSA. “It will be paid in full.”

Another source at PDVSA and three sources in Venezuela’s financial industry confirmed that the company plans to pay. The sources spoke last week and requested anonymity because they were not authorized to speak publicly.

Neither PDVSA nor Venezuela’s oil ministry immediately responded to requests for comment.

PDVSA must pay $840 million by Oct. 27 to cover an amortization payment on the bond, and then has 30 more days to make a $107 million interest payment.

“PDVSA has been making payments on the 2020 bond and they tell us they plan to keep doing so,” said one local financial operator who has spoken with the company about the plans.

To be sure, this year PDVSA has made payments only on its 2020 and 2022 bonds, prompting ratings agencies to declare the company and Venezuela’s government in selective default. The drop in crude prices that began in 2014 and an ensuing decline in production have reduced the OPEC nation’s government revenue.

Investors believe PDVSA will prioritize the 2020 bond because of the potential implications for Citgo. The remaining shares in the refiner are already pledged to Russia’s Rosneft as collateral on a $1.5 billion loan.

And it is also under threat from Canadian miner Crystallex, which has won a judge’s authorization to seize Citgo shares to collect on a $1.4 billion award stemming from a decade-long nationalization dispute.

“PDVSA has demonstrated via its legal efforts a strong preference to maintain ownership of Citgo,” JP Morgan wrote in a note to clients last week.