Chinese state-owned giant PetroChina, which hasn’t bought Venezuelan crude since the U.S. imposed sanctions on Venezuela in 2019, is not too keen to start buying again after the U.S. authorized global traders to market the crude from the world’s biggest reserves holder.
PetroChina has told traders not to buy or trade Venezuela’s oil—a trade that is now under U.S. control after the capture of Nicolas Maduro, trading sources with knowledge of the matter told Reuters on Tuesday.
The Chinese oil and gas giant stopped imports of Venezuelan crude in 2019, when the first Trump Administration slapped sanctions on Venezuela’s oil sector, for fear of running afoul of the restrictions. Before the 2019 sanctions, PetroChina was the single biggest buyer of crude from Venezuela.
Now PetroChina is refraining from buying crude marketed by the world’s top oil trading houses – with U.S. blessing – as it assesses the situation, according to Reuters’ sources.
One reason is the concern that the U.S. controls the oil from Venezuela, another is that the offers aren’t competitive compared to other supplies of heavy crude, including from Canada, the sources told the publication.
The discount of Venezuela’s flagship crude grade Merey relative to Brent has narrowed by about $10 per barrel since the ousting of Maduro.
Vitol, the world’s biggest independent oil trader, is offering Venezuelan crude to Chinese refiners at a discount that’s three times narrower compared to the illicit sales from Venezuela before Maduro’s ousting, anonymous traders with knowledge of the development told Bloomberg last week.
Vitol has recently offered cargoes of Venezuela’s flagship Merey heavy sour crude grade to China at a discount of $5 per barrel to ICE Brent, according to Bloomberg’s sources.
This compares with a discount as wide as $15 a barrel to ICE Brent on a delivered basis before the U.S. blitz in Venezuela and the capture of Maduro.
Meanwhile, Chinese independent refiners, which gorged on cheap sanctioned Venezuelan crude in the past few years, are likely welcoming what could be their last imports of sanctioned Venezuelan oil, which loaded before the U.S. blockade.
By Charles Kennedy for Oilprice.com
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