Venezuela’s oil exports remain almost unchanged

In recent months Venezuela has been emerging from years of official exclusion in the global oil markets as the US adapts to supply difficulties created by the ongoing sanctions against Iran and recent ones against Russia.

However, in November 2022 Venezuela reported nearly unchanged oil exports, at an average of 651,000bpd. This was despite the US’s recent sanction relaxation, initiated on a temporary basis in October in order to incentivize Venezuela to hold fair and just presidential elections in 2024. This had spurred spot sales of Venezuelan crude and fuel oil, primarily to China, and mediated export deals to India.

However, Venezuelan state oil company PDVSA has problems other than international sanctions. It is facing stagnant crude production, logistical issues, and an ongoing hesitancy from some ship operators to dock in Venezuelan ports. It is these problems, rather than the official sanctions, that have kept down the total volume of exports.

meanwhile the diversification of customers and sales through intermediaries has become increasingly prevalent.

In November there were 40 vessels that departed from Venezuelan ports, but the total carried was a slight decrease in petroleum exports, but an uptick in byproducts compared to October. PDVSA’s heavy crude inventories in the Orinoco Belt have dwindled to their lowest levels this year. As a result, Venezuela might not reap significant financial benefits from the US sanction relaxation if PDVSA was unable to augment its oil output and exports.

Meanwhile, Indian crude oil imports from Venezuela are set to recommence after a three-year pause. Reliance Industries Ltd has booked three tankers to load oil from Venezuela in December and January 2024. Three Indian refiners have purchased around 4m barrels of Venezuelan crude for February delivery at between $7.50 and $8 per barrel below dated Brent on a delivered ex-ship basis, reported Reuters. No cargoes have yet arrived in India yet, but some vessels completed loading in late November, and were expected to be allowed to depart in December.

The Indian purchases were said to have been achieved through intermediaries.

Taking cargoes will depend on the buyers’ ability to charter tankers that agree to load at Venezuelan ports, where delays and quality issues are common, and their willingness to pay upfront, as demanded by PDVSA, some of the sources told Reuters.

India last imported Venezuelan crude in 2020. Access to Venezuela’s heavy oil could cap import costs for India, which has become a major Russian oil buyer, and further reduce its reliance on the Middle East.

PDVSA has also augmented fuel imports, including naphtha and gasoline blend stock supplied by Chevron and Spain’s Repsol, as part of US-authorized oil swaps.

However, PDVSA’s use of trading houses and intermediaries to negotiate oil sales to Asian refiners is creating confusion, some buyers have said. This has led some customers, including China’s independent refiners, to have held off from making new purchases because prices have to be negotiated through the middlemen.