In a noteworthy development, PetroChina Co. is poised to receive a shipment of Venezuelan oil, marking a significant shift in its sourcing strategies. The cargo, consisting of Merey crude, is slated for use at PetroChina’s massive refinery in Guangdong. This move comes on the heels of the US’s decision to roll back sanctions on Venezuela late last year, allowing for such transactions to take place.
While the cargo is expected to be discharged over the weekend, insiders familiar with the matter indicate that PetroChina may refrain from further purchases if US sanctions on Venezuela are reinstated. These sources, who opted to remain anonymous due to the sensitive nature of the information, suggest that PetroChina’s stance hinges on the prevailing geopolitical environment.
Officially, China resumed imports from Venezuela in February, marking a significant milestone since the hiatus that began in 2019. Unofficially, however, China, as the world’s largest crude importer, has been quietly procuring Venezuelan oil over the years, a fact confirmed by traders and third-party data providers. Notably, oil shipments have often been disguised as bitumen mix, underscoring the complexities of global oil trade.
Despite repeated attempts to solicit comments from China National Petroleum Corp., the entity responsible for media queries related to PetroChina, no response was forthcoming at the time of writing. This silence reflects the sensitivity surrounding oil trade dynamics and the cautious approach taken by major players in the industry.
The US’s decision to suspend sanctions on Venezuela last year was seen as a response to democratic developments within the country. However, there are concerns that penalties could be reinstated following President Nicolás Maduro’s decision to seek a third term in an upcoming election, a move that has already disqualified his main rival, virtually guaranteeing his victory.
The Guangdong refinery, located in Southern China, was originally a joint venture with state-run Petróleos de Venezuela SA (PDVSA). Merey crude was intended to constitute half of the refinery’s crude supply. However, in 2019, PetroChina opted to sever ties with PDVSA due to the latter’s deteriorating financial situation.
Following the commencement of commissioning activities at the refinery in early 2023, PetroChina had to source heavy crude oil supplies from other countries such as Canada, Colombia, and Ecuador due to US sanctions disrupting access to Merey crude. Notably, the Venezuelan grade is currently being offered at a discount of close to $10 to ICE Brent, as per traders.
The very large crude carrier Elysia, which is transporting the cargo for PetroChina, is expected to dock at Jieyang port on Saturday, as per ship-tracking data compiled by Bloomberg. The vessel set sail from the Jose oil terminal in early February, marking a symbolic moment in the evolving landscape of global oil trade.
As PetroChina navigates the intricacies of international sanctions and geopolitical dynamics, its strategic decisions regarding Venezuelan oil will continue to be closely watched, reflecting the broader shifts underway in the global energy landscape.
(Source: Bloomberg)
