A Bloomberg investigation has uncovered a plan by Venezuela and Syria to circumvent Western sanctions on the Middle Eastern nation and ship its crude oil to Aruba to refine it and then market it internationally, including in the U.S.
The plan, Ben Bartenstein writes, was never actually realized, but it involved selling Syrian oil to Venezuela at a substantial discount, and then shipping it through a Russian shale company to Aruba, which houses one of the world’s largest refineries, property of Valero Energy and leased to Venezuela’s PDVSA.
One person that took part in the events, a Venezuelan oil trader, told Bartenstein that the deal did not have a political focus. “It was a logistical solution to make a lot of money,” Wilmer Ruperti said.
The Aruba refinery is operated by PDVSA’s U.S. business division, Citgo. The company told Bloomberg’s reporter that it is “committed to the operation of the Citgo Aruba Refinery in compliance with all applicable laws, and this includes all U.S. sanctions laws.”
Syria used to pump close to 400,000 bpd between 2006 and 2011, but in 2012, as the civil war ravaged the country, output fell sharply, to reach just 30,000 bpd last year.
Meanwhile, Venezuela is having serious problems of its own. As of April, oil production stood at 1.96 million barrels per day, down 10 percent from last year, and down more than 17 percent from 2015 levels – and output continues to trend downward. Production has been declining for more than a decade, mainly because oil revenues are used to finance the government, leaving little for state-owned PDVSA to reinvest in its operations.
There has been concern that the country may default on its debt, amid ballooning inflation, massive protests, and shortages of basic foodstuffs and medicines. However, Oil Minister Nelson Martinez said today at OPEC’s meeting in Vienna that Caracas is considering a few options of repaying some parts of what it owes China and Russia, which together have lent it US$50 billion.
By Irina Slav for Oilprice.com
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