Venezuelan crude heads to Asia despite US sanctions, data shows

Venezuelan crude heads to Asia despite US sanctions, data shows

More than 3 million barrels of oil are waiting off China’s coast with another 5 million en route, according to new data.

Some traders appear to be willing to run the risk of contravening US sanctions as Venezuelan oil has become so cheap [File: Stringer/third party via Reuters]

Venezuela’s oil exports have collapsed since the U.S. placed sanctions on its state producer, but some crude from the OPEC member is still making its way to buyers in Asia.

Officially, China hasn’t imported any Venezuelan crude since September after Washington sanctioned state entities including Petróleos de Venezuela, S.A. Information from data intelligence firm Kpler, however, signals the Asian nation is still buying, with as much as 3.3 million barrels waiting off the Chinese coast as of June 15 and another 5 million en route to the port of Qingdao.

The data suggests that some traders are still willing to run the risk of contravening U.S. sanctions as Venezuelan oil has become so cheap. The grades are also particularly favored by Asian refiners with plants well-suited to handle its heavy-sour quality at a time when supplies of similar-type crude have tightened due to the OPEC+ output curbs.

In order to get Venezuelan oil to buyers, traders use inventive methods to disguise the cargo’s origin. Most of the Venezuelan crude headed for China is on tankers that picked up their shipments via ship-to-ship transfers in the Malacca Straits, rather than from Venezuelan ports directly, said Kpler’s analyst Sean Tan.

Advertisement

No one responded to faxed questions sent to China’s Ministry of Commerce and the General Administration of Customs on the nation’s imports of Venezuelan oil.

Oil in Transit

One such shipment started its journey to China on Voyager I. In early-April, the very-large crude carrier called at two ports in Venezuela before sailing to the Malacca Straits, one of the world’s most important waterways that connect China to its biggest suppliers.

It was there that the oil was transferred to the tanker Pola, which set sail for China early this month. The laden vessel was last seen waiting off the major Chinese storage hub of Zhoushan on June 16, according to ship-tracking data.

While ship-to-ship transfers of oil from larger supertankers to smaller vessels are commonplace for the supply of cargoes to shallower ports, it’s also often used to obscure the origin of cargoes. The method involves two tankers positioning alongside each other at sea with connection hoses, moving oil from one vessel to the other.

As of Tuesday, a Suezmax tanker had offloaded some Venezuelan oil at Aoshan port, near Zhoushan, while a Very Large Crude Carrier with some Venezuelan crude onboard also discharged some of its cargo at Ningbo, according to ship-tracking data.

Another two supertankers with Venezuelan Merey crude were sailing toward Singapore after waiting off China for some time as of June 15, said Kpler’s Tan. According to ship-tracking data, the vessels didn’t register any decline in draft while waiting near China, suggesting they may still be laden with oil. Separately, 7.5 million barrels of Venezuelan oil is estimated to be floating off Singapore and Malacca Straits, Tan added.

Desired Quality

“Venezuela’s heavy-sour crudes with their high residue content is a very well-liked feedstock among Chinese refiners,” according to Serena Huang, a senior analyst at market analytics firm Vortexa Ltd.

Grades such as Merey and Hamaca are typically high in sulfur and yield a large portion of bitumen and heavy fuels when refined, making them a cheap feedstock for refineries with sophisticated units. The crude can produce a lot of products that simply go into road projects and construction, said Eugene Lindell, senior oil analyst at JBC Energy in Vienna.

As China’s economy reopens and government stimulus jump-starts industrial activity and infrastructural spending, domestic demand for fuels as well as bitumen are set to get a lift. In March, the country’s Ministry of Transport called for accelerated road construction projects. Shortly after, China’s bitumen output saw a 16% surge in April to a record 4.86 million tons.

“Bitumen margins have been quite strong since late last year and as China accelerates resumption of economy, demand is very much supported,” Yuntao Liu, London-based analyst with Energy Aspects said in email. Moreover, the country’s demand for heavy crudes is also expected to get some support from the blending of bitumen into very-low sulfur fuel oil, a fuel predominantly used by ships.

34 Comments

  1. Profile photo ofcelestine

    Reply

    Awesome

  2. Reply

    Thanks for the update

  3. Profile photo ofSommycruz

    Reply

    Awesome

  4. Reply

    Good

  5. Reply

    Thanks for sharing

  6. Reply

    Why

  7. Reply

    Nice update thanks for sharing

  8. Reply

    Fantastic piece

  9. Reply

    Fantastic

  10. Reply

    Why

  11. Reply

    Fine

  12. Reply

    Nice update

  13. Reply

    Thanks for the information

  14. Profile photo ofItz Kvng Twitch

    Reply

    Very interesting

  15. Reply

    Good to know

  16. Reply

    Can you imagine

  17. Reply

    Thanks for the update

  18. Reply

    Nice update

  19. Reply

    Interesting

  20. Reply

    awesome

  21. Reply

    This is really good and interesting to know

  22. Reply

    Good 2

  23. Profile photo ofSIRMUSTY

    Reply

    they must survive

  24. Reply

    Nice update

  25. Reply

    Nice one

  26. Reply

    Very good

  27. Reply

    Cool

  28. Reply

    good

  29. Reply

    Interesting

  30. Reply

    Great one

  31. Reply

    Good

  32. Reply

    Informative

  33. Reply

    Nyx one

  34. Reply

    Cool information…..thanks for the update

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these <abbr title="HyperText Markup Language">HTML</abbr> tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>