Russia Now Resells 66% of Venezuela’s Oil for It, Helping With US Sanctions

Afraid of sanctions? Buy Venezuelan crude from Rosneft

Editor’s note: Rosneft will claim its reselling of Venezuela’s oil has nothing to do with helping it evade sanctions, and is simply a matter of accepting debt repayment in crude, however, the fact is that sales going through an intermediary does help to calm buyers in India and China that might otherwise shun crude from the heavily US-sanctioned PDVSA. My guess is that when the current Rosneft loan to Venezuela is repaid, the two may book another, possibly entirely fictitious loan, just so that the practice may continue.

Russian state oil major Rosneft has become the main trader of Venezuelan crude, shipping oil to buyers in China and India and helping Caracas offset the loss of traditional dealers who are avoiding it for fear of breaching U.S. sanctions.

Trading sources and Refinitiv Eikon data showed Rosneft became the biggest buyer of Venezuelan crude in July and the first half of August.

It took 40% of state oil company PDVSA’s exports in July and 66% so far in August, according to the firm’s export programs and the Refinitiv Eikon data, double the purchases before sanctions.

Three industry sources said Rosneft, which produces around 5% of the world’s oil, is now taking care of shipping and marketing operations for the bulk of Venezuelan oil exports, ensuring that PDVSA can continue to supply buyers.

Rosneft used to resell volumes it bought from PDVSA to trading firms and was less involved in marketing.

Now it has started supplying some PDVSA clients  Chinese and Indian refineries  while trading houses such as Swiss-based Trafigura and Vitol have walked away because they fear they could breach secondary U.S. sanctions, according to six trade sources.

Trafigura and Vitol declined to comment.

Rosneft and PDVSA did no respond to requests for comment.

Oil accounts for more than 95% of Venezuela’s export revenue and Washington has warned trading houses and other buyers about possible sanctions if they prop up Caracas.

The United States and some Western governments have recognized Venezuelan opposition leader Juan Guaido as the country’s rightful head of state and are seeking to oust the current socialist President Nicolas Maduro.

A State Department spokesman said the United States “has put foreign institutions on notice that they will face sanctions for being involved in facilitating illegitimate transactions that benefit … Maduro and his corrupt network.

“We will continue to use the full weight of U.S. economic and diplomatic power to complete the peaceful transition to a once-again free, prosperous and stable Venezuela.”

Moscow is one of Maduro’s closest allies and has provided military support to his government as well as billions of dollars in loans and equipment.

“Rosneft has been dealing with Venezuela’s crude directly, fixing vessels and offering it to end users”, a source with an oil trading firm said.

Rosneft is not in breach of U.S. sanctions because it takes oil as part of debt servicing agreements after lending Caracas money in previous years.

PDVSA lowered its outstanding debt to Rosneft to $1.1 billion by the end of the second quarter this year from $1.8 billion at the end of the first, the Russian company said Wednesday.

The sources said most deals between the two do not involve cash. Those that do are processed in euros rather than in U.S. dollars to cover Venezuela’s debt to Rosneft.

Russia and China have called U.S. sanctions against Venezuela unilateral and illegal.

Last week, Washington imposed new sanctions on Venezuela, threatening to take measures against any firm “materially assisting” Maduro’s government.

Supertankers to Asia

According to PDVSA’s loading export schedules, Rosneft has chartered four super-tankers (very large crude carriers or VLCCs) and three smaller Suezmax tankers for Venezuelan crude oil loadings in the first half of August.

All operations are being conducted by Rosneft’s trading office in Geneva, according to three trading sources.

Rosneft has been selling Venezuelan crude to two main destinations  China and India according to the sources, PDVSA’s loading data and Eikon Refinitiv shipping data.

Rosneft delivered two super-tankers with 280,000 tons of oil each to Shandong in eastern China in July and August, and the oil went to an independent refinery, according to Refinitiv crude analyst Emma Li and two trading executives.

This is unusual, because oil has been imported only by state giant Petrochina under term contracts with PDVSA.

Rosneft delivered a separate cargo of 140,000 tons to a state-run oil firm, also to Shandong, in mid-August, Refinitiv’s Li said.

The new sales came after Rosneft stepped up marketing efforts in May. It visited several independent refiners in Shandong, said a purchasing executive with one independent refiner who met Rosneft officials.

Rosneft has also become an active supplier of Venezuelan crude oil to India. The company has increased Venezuelan oil sales to India’s refiners Nayara Energy, which it partly co-owns, and Reliance this year. As a result the refiners decreased direct purchases from PDVSA.

Nayara Energy and Reliance declined to comment.

According to data from OPEC, Venezuelan oil output has collapsed to around 0.7-1.0 million barrels per day (bpd) from as much as 3 million at the turn of the century due to a lack of investments and sanctions.

The United States, India and China were Venezuela’s biggest customers prior to the sanctions.

Source: The Moscow Times

  1. Savely says

    Oh, if Rosneft also buy and sell Venezuela’s oil with euro or some other currency, that’d be great!

  2. CHUCKMAN says

    It’s just great to see human ingenuity overcoming blundering imperial stupidity.

    This development – along with some others, such as rapidly-developing Russian ties with China, or Russia’s emphasis on import substitution, to say nothing of the fate of the American dollar – I think shows us what unintended consequences heavy-handed sanctions policies can have.

    I’m not even considering all the harm done to millions of innocent people by illegal sanctions because those in Washington conducting this “war by other means” just couldn’t care less about them.

    But they should care about some of the unintended consequences of sanctions because they are matters that will shift future relationships, alliances, and balances of power.

    The fact is that people adapt to adverse conditions over time, whether natural or man-made, always.

    That that is ignored by those now trying to run the planet from the Oval Office is just further proof of how foolish and dangerous they really are.

    1. DarkEyes says

      It is IMO the AIPAC-Government which is in a hurry (Agenda 2030 & Agenda 21) to finally get their way and rule the planet their way.

      The Banksters want all the oil resource (energie) there is in the world as their property so they can start directing who gets energy or not.
      If you are against the New Bosses of the Planet you will get no oil, you will be sitting in the cold.

      The world has to stop these jewish insanity wanting and planning their reign over the goyims and the planet.

    2. Mary E says

      Absolutely right on!

  3. jm74 says

    There lies the problem; afraid to go against US sanction. They happen to be illegal and are US domestic laws not international. To put Russia, China into the same category as those who are afraid is an insult and maybe the author hasn’t noticed but China and Russia don’t care less about US domestic laws.
    Moscow Times is anti-Putin and liberal based; says it all.

    1. Pedro Jose G Cardozo says

      very true¡¡

  4. Tahau Taua says

    The fact that Moscow Times is free to publish anti-Putin rubbish at all; counters the authoritarian crap we hear in the West about Russia.

  5. Mary E says

    Well, India and China are still with them~ hard to believe that a country which used to be admired around the world (they kept their evil hidden very well) is now using these horrific sanctions against countries so it can steal a country’s oil! It is unbelievable but now that the world knows about how the US operates it should just jump start its rollover to a currency other than the $USD, which has nothing backing it anyway. The US is the world’s enemy….the rogue state depicted in the original Star Wars series…if you don’t know about the ones from the early 1970’s, get an education and watch..entertaining too!

    1. James Willy says

      I never did watch any of them due to the fact that I have been boycotting hollywood since the 1960s and have never watched anything from them in almost 50 years. Hows that for a world record? Last time I watched tv it was a black and white set at moms house. Long, long ago.

  6. James Willy says

    Maybe we get lucky and dorian will hit the gulf as Cat 5 and wipe out kochiez refineries in texas. Now that would be something to celebrate. Wonder how dave is doing with his billions now??????? Hope he burns forever in hell.

    1. Mary E says

      As the old saying goes: good bye to bad rubbish!

  7. thomas malthaus says

    I don’t know whether Russia will capture this contract.

    In light of new business, diplomatic, and security ties being established amongst Russia, Venezuela, and Iran, this seems like a slam dunk.

    If the euro and dollar are following their respective nations into oblivion, it would seem that only sovereigns with confirmed gold stores and respectable balances sheets might be the only countries worthy of transacting business with when the crisis hits.

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