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A private Mexican company will buy 15 million barrels of Venezuelan oil under an oil-for-food deal struck with the government in Caracas, the firm, Libre Abordo, told Reuters.
Earlier this month, Reuters cited documents that revealed the Mexican company had already received 6.2 million barrels of Venezuelan crude that it would resell on international markets and had scheduled two more cargos of oil and fuel for delivery by the end of the month.
In exchange, Libre Abordo supplied corn and water to Venezuela, the earlier report said, quoting the Mexican company, which also said the deal, signed last year, was not in violation of U.S. sanctions because it involved no cash payments.
Documentation from Venezuela’s PdVSA shows that since the deal was signed late last year, Libre Abordo and another related company, Schlager Business Group, had bought some 14.3 million barrels of Venezuelan oil and fuels.
“We will reach some 15 million barrels - it is not an exact figure - through the first contract signed with Petroleos de Venezuela,” the company told Reuters.
Venezuela has been grappling with hyperinflation and shortages of basic products as a result of the U.S. sanctions levied on the Maduro government, which Washington has declared illegitimate. Oil is the country’s biggest export commodity, and U.S. sanctions have crippled this revenue stream, forcing the government to seek other ways to bring in food and, apparently, water.
There are also severe fuel shortages across the country, and the government has reportedly begun shutting down refineries. According to an unnamed source who spoke to Bloomberg, the government will leave only a few stations open to be managed by the army. These, however, will only service medical, food transport, and utility vehicles.
Meanwhile, Washington is preparing more sanctions for the Venezuelan government, which is now dealing with the coronavirus on top of an existing humanitarian crisis, with 70 cases reported as of Monday.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.