LONDON/SINGAPORE/MEXICO CITY, (Reuters) – A Chinese logistics firm has emerged as a central player in the supply of sanctioned oil from Iran and Venezuela, even after it was blacklisted by Washington two years ago for handling Iranian crude, seven sources with knowledge of the deals told Reuters.
The more prominent role of China Concord Petroleum Co, also known as CCPC, and its expansion into trading with Venezuela, have not previously been reported and highlight the limitations of Washington’s system of restrictions, analysts say.
The details of the deals were described to Reuters by a range of individuals including one China-based source familiar with CCPC’s operations, Iranian officials and a source at Venezuela’s state-owned oil company PDVSA.
CCPC got involved in the Venezuelan oil trade this year through deals with small independent Chinese refineries known as teapots, according to monthly loading schedules, export schedules and invoices from April and May this year from PDVSA, as well as tanker tracking data and the PDVSA source.
The Hong Kong-registered firm has quickly become an important partner for Caracas, chartering ships in April and May carrying over 20% of Venezuela’s total oil exports in that period or nearly $445 million worth of crude, the PDVSA documents and tanker tracking data showed. CCPC did not charter any ships carrying Venezuelan oil in June, according to the documents.
Many refineries worldwide, including state-run players in China, stopped buying crude from Iran and Venezuela after the U.S. imposed sanctions, cutting millions of barrels per day from exports and billions of dollars from their income.
Dependent on oil revenues to run their countries, Tehran and Caracas have since engaged in an elaborate game of cat-and-mouse with Washington to keep exporting crude, employing numerous techniques to avoid detection, including ship-to-ship transfers, shell companies and middlemen who operate outside the U.S. financial sphere. In the past year, CCPC has acquired at least 14 tankers to transport oil from Iran or Venezuela to China, two of the sources said.
A person reached by Reuters on CCPC’s registered phone number said she was unaware of any business activities of CCPC. She declined to be named. An email sent to an address for the company listed on the U.S. Treasury’s website did not get a response.
PDVSA and Venezuela’s oil ministry did not respond to a request for comment. Iran’s oil ministry also declined to comment.
“China maintains normal, legitimate trades with Iran and Venezuela under the framework of international law that shall deserve respect and protection,” a spokesman for China’s foreign ministry said in response to questions about the role of Chinese companies in the trading of sanctioned oil.
“China strongly opposes unilateral sanctions and urges the United States to remove the ‘long-arm jurisdiction’ on companies and individuals.”
U.S. officials, typically, do not move to interdict Iranian or Venezuelan oil shipments bought by Chinese or any international customers. But they can make it difficult for those involved in the trade to operate by barring U.S. citizens and companies from dealing with them, making them pariahs for western banks.
In 2019, Washington added CCPC to a list of entities under sanctions for violating restrictions on handling and transacting Iranian oil. The company has not commented publicly on the sanctions and Reuters could not determine what impact the U.S. blacklisting has had on CCPC.
CCPC supplies half a dozen Chinese teapot refineries with Iranian oil, three China-based sources said.
The sources declined to disclose the identities of these refineries or to be named due to the sensitivity of the matter. The documents reviewed by Reuters did not include the names of the refineries.
Iranian officials familiar with the matter confirmed that CCPC was a central player in Tehran’s oil trade with China.
China received a daily average of 557,000 barrels of Iranian crude between November and March, or roughly 5% of total imports by the world’s biggest importer, according to Refinitiv Oil Research, returning to levels last seen before former U.S. President Donald Trump re-imposed sanctions on Iran in 2018.
China’s imports of Venezuelan crude and fuel averaged 324,000 barrels per day (bpd) in the past year to end-April, according to cargo-tracking specialist Vortexa Analytics, below pre-sanctions levels, but still more than 60% of Venezuela’s total oil exports.
The sanctions on Venezuela’s PDVSA were introduced in 2019 as part of a bid to topple that country’s socialist president, Nicolas Maduro.
The U.S. Treasury declined to comment when asked about CCPC’s critical role in facilitating oil trade from Iran and Venezuela, but said that the agency pursues actions on an ongoing basis.
Julia Friedlander, a former senior sanctions official with the U.S. Treasury, said the growing trade in blacklisted oil showed how those opposed were getting better at evasion.
“It shows there are limitations as to what U.S. sanctions can do especially when you target multiple like-minded or selectively like-minded actors like oil traders. So, you incentivise these alternative axes of resilience,” said Friedlander, who is now a senior fellow at the Atlantic Council’s GeoEconomics Center.
The sanctions have battered the economies of Iran and Venezuela and dealt a serious blow to their tanker fleets, which are overstretched and in need of an overhaul, according to analysts and publicly available data on PDVSA’s fleet.
The 14 tankers acquired by CCPC have a capacity of around 28 million barrels of oil. At least one other tanker is also linked to CCPC, boosting their capacity to some 30 million barrels, the two sources said.
Iran exported more than 600,000 bpd of crude in June, a Reuters survey showed. That compares with a high of 2.8 million bpd in 2018, before sanctions were imposed, but up from 300,000 bpd in 2020, according to assessments based on tanker tracking data.
