SINGAPORE/HOUSTON, (Reuters) – China has entrusted a defence-focussed state firm to ship millions of barrels of Venezuelan oil despite U.S. sanctions, part of a deal to offset Caracas’ billions of dollars of debt to Beijing, according to three sources and tanker tracking data.
China National Petroleum Corp (CNPC) stopped carrying Venezuelan oil in August 2019 after Washington tightened sanctions on the South American exporter. But it continued to find its way to China via traders who rebranded the fuel as Malaysian, Reuters has reported.
Since November 2020 China Aerospace Science and Industry Corp (CASIC) has been carrying Venezuelan crude on three tankers it acquired that year from PetroChina, CNPC’s listed vehicle, the sources said. The oil is stored on a tank farm it also took over from PetroChina, the sources said.
The three CASIC tankers load in Venezuela with their transponders active, allowing third-party tracking, Eikon data showed. The firm has taken 13 cargoes carrying a total of about 25 million barrels of oil, including two vessels due to arrive in China in September, according to the loading schedules of Venezuelan state oil firm PDVSA, and tanker tracking data from Refinitiv and Vortexa Analytics.
The 13 shipments, worth about $1.5 billion at formula prices for Venezuela’s flagship-grade Merey crude, were declared “crude oil” at Chinese customs, without specifying origin, said one of the sources.
“These shipments are strictly under a government mandate, where CASIC was designated to move the oil as payment to offset Venezuelan debt (to China),” the person said.
The three sources spoke on condition of anonymity due to the sensitivity of the matter.
Without commenting on debt offset, China’s foreign ministry said on Friday the two nations are engaged in cooperation over “oil for humanitarian goods”.
“The cooperation meets Venezuela’s current needs and is also in line with humanitarian principles,” a ministry spokesperson said, adding that China opposes U.S. unilateral sanctions and long-arm jurisdiction.
Media departments at CASIC and the General Administration of Chinese Customs did not respond to requests for comment. A CNPC representative declined to comment.
A second source said that although part of each cargo pays down debt, other goods, such as COVID-19 vaccines, are also being subtracted from the crude sales.
“All money from proceeds stays in China. Venezuela’s foreign affairs ministry is in charge of conciliation and accountability,” said this person.
At roughly 42,000 barrels a day, these shipments have increased total Venezuelan oil to China to about 420,000 bpd between January and July this year, equivalent to about 3% of China’s consumption, according to Emma Li, analyst with Vortexa, which tracks such flows.
China has not officially reported any crude oil imports from Venezuela since October 2019.
Venezuela’s debt dates to 2007, the era of then-President Hugo Chavez, when the country borrowed more than $50 billion from Beijing under loan-for-oil deals.
Reuters could not determine how much of Venezuela’s debt remains outstanding. In August 2020, Beijing agreed to extend a grace period for $19 billion of the loans, Reuters reported, but China and Venezuela have not said whether that period has ended.
