CARACAS / HOUSTON / WASHINGTON, Sept.25 (Reuters) – Venezuela has struck a key deal to swap its heavy oil for Iranian condensate it can use to improve the quality of its tar-type crude, with the first shipments expected this week, five people familiar with the matter said.
As the South American country seeks to boost its declining oil exports in the face of US sanctions, sources say the agreement between state-owned companies Petroleos de Venezuela (PDVSA) and National Iranian Oil Company (NIOC) deepens cooperation between two of Washington’s enemies.
One of the people said the swap deal is expected to last six months in its first phase, but could be extended. Reuters could not immediately determine further details of the mwpact.
The petroleum ministries of Venezuela and Iran, as well as state-owned companies PDVSA and NIOC did not respond to requests for comment.
The deal could constitute a violation of US sanctions against the two countries, according to an email from the Treasury Department to Reuters which cited US government orders establishing the punitive measures.
US sanctions programs not only prohibit Americans from doing business with the oil sectors of Iran and Venezuela, but also threaten to impose “secondary sanctions” against any non-US person or entity that trades with them. oil companies from both countries.
Secondary sanctions can result in a range of sanctions against targeted individuals, including removal of access to the US financial system, fines, or freezing of US assets.
Any “transaction with the NIOC by non-US persons is generally subject to secondary sanctions,” the Treasury Department said in response to a question about the deal. He also said he “retains the power to impose sanctions on anyone determined to operate in the petroleum sector of the Venezuelan economy”, but did not specifically say whether the current agreement violated sanctions. .
US sanctions are often applied at the discretion of the administration in power. The government of former US President Donald Trump seized shipments of Iranian fuel destined for Venezuela last year for alleged sanctions violations, but his successor Joe Biden has taken no similar action.
In Washington, a source familiar with the matter said the Venezuela-Iran swap deal has been on the radar screens of U.S. government officials as a likely violation of sanctions in recent months and they want to see how far it will work in practical terms.
U.S. officials fear, the source said, that Iranian thinner shipments could help provide President Nicolas Maduro with a financial lifeline as he negotiates with the Venezuelan opposition ahead of the election.
Sanctions against the two countries have reduced their oil sales in recent years, prompting NIOC to support Venezuela – including through shipping services and fuel swaps – in allocating exports to Asia. . Read more
At a meeting at the United Nations General Assembly in New York on Wednesday, the foreign ministers of Venezuela and Iran publicly declared their commitment to boost bilateral trade, despite US attempts to block it.
Trump’s tightening of sanctions last year contributed to a 38% drop in Venezuela’s oil exports – the backbone of its economy – to their lowest level in 77 years and a reduction in import sources fuel, exacerbating gasoline shortages in the country of some 30 million people.
A spokesman for the US Treasury said the department was “concerned” about reports of oil deals between Venezuela and Iran, but had not verified details.
“We will continue to apply our sanctions related to Iran and Venezuela,” the spokesperson said. The Treasury “has demonstrated its willingness” to blacklist entities which support Iranian attempts to evade US sanctions and which “further allow their destabilizing behavior in the world,” the official added.
The swap deal would provide PDVSA with a constant supply of condensate, which it needs to dilute extra-heavy oil production in the Orinoco Belt, its largest producing region, residents said. Crude bituminous requires mixing before it can be transported and exported.
In return, Iran will receive shipments of Venezuelan heavy oil that it can market in Asia, said the people, who declined to be identified because they were not authorized to speak publicly.
CARGO THIS WEEK
PDVSA has boosted oil swaps to minimize cash payments since the U.S. Treasury Department in 2019 prevented the company from using U.S. dollars. Washington has also sanctioned foreign companies for receiving or shipping Venezuelan oil.
Since last year, PDVSA has imported two shipments of Iranian condensate under one-off swap agreements to meet specific diluent needs, and has also traded Venezuelan jet fuel for Iranian gasoline.
The new contract would help PDVSA secure a source of diluents, stabilizing exports of Orinoco crude blends, while allowing its own lighter oil to be refined in Venezuela to produce much-needed fuel. , said three people.
The first shipment of 1.9 million barrels of Venezuelan heavy crude Merey under the new trade set sail earlier this week from the port of PDVSA in Jose on the National-owned and operated very large crude carrier (VLCC) Felicity Iranian Tanker Co (NITC), according to the three-person and monitoring service TankerTrackers.com.
NITC, a unit of NIOC, did not respond to a request for comment.
The vessel was not included in PDVSA’s monthly port schedules for September, which lists expected imports and exports. However, TankerTrackers.com identified him while he was at Jose’s this month.
The shipment of Venezuelan crude is a partial payment for a shipment of 2 million barrels of Iranian condensate that arrived in Venezuela on Thursday, according to the three sources and one of PDVSA’s port schedules.
Last year, the previous Trump administration seized more than one million barrels of Iranian fuel bound for Venezuela and blacklisted five tanker captains, as part of a “maximum pressure” strategy. but the United States has not banned recent Iranian deliveries to Venezuela.
The US State Department declined to comment on the deal. A spokesperson for the Treasury did not respond to a question from Reuters about government fears that the Iran-Venezuela deals would allow PDVSA to step up its exports.
U.S. government officials have insisted they have no plans to ease sanctions against Venezuela unless Maduro takes definitive steps towards free and fair elections.
Trump’s restrictions on established companies doing business with PDVSA prompted the socialist-led nation to look to trading with Iran and other countries, while negotiating with a series of little-known clients.
PDVSA’s new customers and swaps have allowed it to keep exports stable around 650,000 barrels per day (bpd) this year, after zigzagging in 2020.
However, a growing shortage of diluents has recently limited oil exports, placing production in the Orinoco Belt in an “emergency”, according to PDVSA documents from August and September relating to the state of its production. which have been reviewed by Reuters.
PDVSA plans to mix Iranian condensate with extra-heavy oil to produce diluted crude oil, a quality demanded by Asian refiners that it has struggled to export since late 2019, when suppliers halted shipments of diluent due to sanctions, the three sources said.
Reporting by Marianna Parraga in Houston, Deisy Buitrago in Caracas and Matt Spetalnick in Washington; additional reporting by Bozorgmehr Sharafedin in London; Editing by Daniel Flynn, Christopher Cushing and Alistair Bell
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