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Venezuela turns to India for major oil exports as US sanctions bite

Oil


Moscow/Caracas: Venezuela’s oil exports have tapered off and shifted toward India since new US sanctions began on January 28 as state-run oil company PDVSA seeks to replace deliveries to the United States and Europe that were disrupted by payment restrictions.

The South American nation is turning its focus to cash-paying buyers, especially in India, its second-largest customer after the United States, amid US sanctions designed to undercut financial support for Venezuelan President Nicolas Maduro. US Sanctions are designed to bar Nicolas Maduro’s access to oil revenue that has helped his government remain in power.

 

In the two weeks since the sanctions were announced, PDVSA has been able to load and export 1.15 million barrels per day (bpd) of crude and refined products, according to Refinitiv Eikon data. Venezuela was exporting about 1.4 million barrels per day in the months before sanctions, according to the Eikon data.

Two supertankers, Baghdad and Folegandros I, launched late on Monday from Venezuela’s Jose terminal carrying cargoes to Indian ports.

Ship tracking data in Refinitiv showed several other tankers carrying Venezuelan crude or fuel towards Asia, although the final destinations of these vessels were not yet clear.

But finding customers in Asia may be difficult, analysts said, as Washington uses its political and financial clout to pressure countries to stay clear of dealing with PDVSA.

Barclays bank addressed the issue in a special report on Venezuela, issued.

“Considering all the difficulties that Venezuela faces in delivering oil to other markets and the legal, reputational and financial risks confronting traders or counterparties that do business with it under the current conditions,” the bank wrote, “it seems unlikely that all production can, in short order, go to other markets.”

US bank Goldman Sachs said in a note on Wednesday that because of the sanctions there was “limited ability for non-US refiners to take on Venezuela’s very heavy crude” beyond India and China.

Before the sanctions, PDVSA shipped over 500,000 barrels per day to the United States, its largest cash market, followed by India then China, at above and below 300,000 barrels per day respectively.

Venezuela has sent its oil minister, Manuel Quevedo, to India to convince refiners, including Reliance Industries Ltd and Nayara Energy Ltd, to double their oil purchases.

“We are selling more than 300,000” barrels per day to Indian buyers, Mr Quevedo said on Monday in New Delhi. “We want to double that amount.”