MOSCOW (MRC) -- A handful of long-term customers of Venezuela’s PDVSA have begun winding down oil trade with the state-run company by scheduling the last cargoes to depart from the sanctioned country ahead of a US deadline, reported Reuters with reference to five sources close to the decisions.
The US government has given the firms - which include Spain's Repsol, Italy's Eni, India's Reliance Industries and Thailand's Tipco Asphalt - deadlines ranging between October and November for ending exemptions to the sanctions allowing some companies still to receive Venezuelan oil, the sources said.
With US elections looming in November, the Trump administration is seeking to raise the heat on Venezuelan President Nicolas Maduro, whose 2018 re-election was not recognized by most Western nations.
Repsol, which since late 2018 had been receiving crude under a swap deal with PDVSA authorized by the US Treasury Department allowing the Spanish company to cash pending debt, received its most recent cargo of Venezuelan oil this month on tanker Delta Ios, according to PDVSA’s exports schedules.
The company does not plan to charter a new vessel to pick up Venezuelan crude after October, a company source said. In response to Reuters’ questions, a Repsol spokesman said the firm “abides by the international norms in force and will keep on abiding.”
Eni, currently receiving crude under a similar swap deal, plans to take a Venezuelan oil cargo later this month on tanker Delta Captain and probably another in October before temporarily ending trade, according to PDVSA’s documents and a company source.
A spokesperson for Eni declined to comment on specific cargoes, but said the company “is operating and will operate in full compliance with applicable sanctions regulations and in continuous dialogue with the relevant authorities.”
Thailand’s Tipco Asphalt has three more cargoes of Venezuelan heavy crude scheduled to load through October, all of them bound for its Kemaman refinery in Malaysia, according to the documents and a company source.
Tipco Asphalt said in a letter to Thailand’s stock exchange this month that the US State Department had contacted the firm in August asking it to wind down procurement of Venezuelan oil by the end of November, warning the company that it could be subject to US sanctions in the event of non-compliance.
Tipco added this it was “taking steps to comply with such request,” including a temporary shutdown of its Kemaman refinery until finding alternative oil supplies.
The company did not immediately respond to an emailed request for further comment.
And Reliance Industries, which in July received a temporary US authorization to swap Venezuelan oil for diesel for the OPEC-member nation, has received some 4 million barrels of Venezuelan crude so far this month and plans to import almost 5 million barrels more in the coming weeks, the PDVSA documents showed.
A source close to Reliance’s plans said the firm will halt imports of Venezuelan oil in November and also shipments of diesel to the nation after a cargo currently on its way.
The pause would last for at least two months and a decision on whether to resume the trade would be taken after the US election.
Reliance and PDVSA did not reply to requests for comment.
As PDVSA’s pool of traditional customers has shrunk since last year due to sanctions, sales to mostly unknown or inexperienced firms accused by Washington of acting as shell companies have partially replaced them. A large portion of the crude taken by these firms ends up in China.
Venezuela has also received help from Iran this year as trade between the two sanctioned nations has deepened. A large tanker that delivered Iranian condensate to PDVSA earlier this month is now loading Venezuelan crude for Iran’s national oil company.
It is yet unknown if Washington will resume authorizing PDVSA’s customers to take Venezuelan oil under swap deals.
The US Treasury Department declined to comment.
US special envoy for Venezuela and Iran, Elliott Abrams, told Reuters that sanctions are “increasingly effective in denying revenue” to Maduro’s administration.
“Around the globe, leading companies are abiding by our sanctions, and acting responsibly and transparently. We appreciate their cooperation,” he added.
Even though scheduled cargoes of Venezuelan crude for Repsol, Eni, Tipco and Reliance are expected to finish soon once authorizations granted by Washington expire, the exchanged fuels most of these companies are delivering to PDVSA have continued arriving in Venezuelan ports, the documents also showed.
Venezuela expects the arrival this month of about 820,000 barrels of Iranian gasoline on tankers Forest, Faxon and Fortune, currently crossing the Atlantic Ocean.
As MRC informed before, Russian state oil company Rosneft's decision to cease operations in Venezuela and sell its assets there to a Russian government-owned company was a "maneuver" made in reaction to collapsing oil prices, a US State Department official said earlier this year.
We remind that Angarsk Polymers Plant, part of Russian oil giant Rosneft, has resumed its low density polyethylene (LDPE) production after an unscheduled shutdown because of a technical issues at the ethylene unit. The plant"s customers said Angarsk Polymers Plant had brought on-stream its LDPE production by 28 August after the forced shutdown due to technical problems at its ethylene production. And the first shipments of polyethylene (PE) to customers began on 31 August. The outage lasted slightly over two weeks and began on 10 August The plant"s annual production capacity is about 75,000 tonnes.
According to MRC's ScanPlast report, June estimated LDPE consumption in Russia grew to 55,260 tonnes from 45,490 tonnes a month earlier. Kazanorgsintez raised its PE output after a spring shutdown for a scheduled turnaround. Russia's estimated LDPE consumption rose to 291,270 tonnes in January-June 2020, up by 5% year on year. Russian producers raised their production, and LDPE imports also increased.
We also remind that Russia's overall PE production totalled 1,712,400 tonnes in the first seven months of 2020, up by 58% year on year. Linear low density polyethylene (LLDPE) accounted for the greatest increase in the output. At the same time, overall PP production in Russia increased in January-July 2020 by 24% year on year to 1,063,700 tonne. ZapSibNeftekhim accounted for the main increase in the output.
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