PetroChina Buys Venezuelan Crude for New Mega Refinery

PetroChina is welcoming this weekend a cargo of Venezuela’s Merey crude for use at a new huge refinery after the U.S. eased sanctions on Venezuelan oil exports a few months ago.

A cargo of Merey is due to arrive in China for the state Chinese energy giant on Saturday, according to Bloomberg’s ship-tracking data and sources.  

Merey is currently being offered at a discount of around $10 per barrel to Brent, trade sources told Bloomberg.

PetroChina will use the Venezuelan heavy crude at its newly commissioned Guangdong refinery, in which Venezuela’s state oil firm PDVSA was a joint venture partner. The Merey grade was expected to be half of the crude supply, but PetroChina dropped PDVSA as a partner in 2019 due to the grave financial troubles of the Venezuelan company.

Since the refinery was commissioned in 2023, PetroChina has bought heavy crude from Canada, Ecuador, and Colombia to replace previously expected Venezuelan volumes.

The eased U.S. sanctions now give PetroChina the chance to buy Venezuela’s Merey, at a reported discount of around $10 a barrel to ICE Brent.

However, if the U.S. were to re-impose sanctions on Venezuela’s oil exports, PetroChina is unlikely to continue buying Venezuelan crude, sources with knowledge of the matter told Bloomberg.

At the end of last year, the U.S. introduced a temporary sanctions relief from October 2023 to April 2024 now allows the production, lifting, sale, and exportation of oil or gas from Venezuela, and the provision of related goods and services, as well as payment of invoices for goods or services related to oil or gas sector operations in Venezuela.

As a result, the top international oil trading houses are back in the business of trading with oil from Venezuela.

China’s state oil and chemicals giant Sinochem has also bought a rare cargo of Venezuelan crude, trade sources told Reuters in December, as Chinese state-owned firms look to acquire cheaper crudes without fear of secondary sanctions now that the U.S. has eased the restrictions on Venezuela.

By Tsvetana Paraskova for Oilprice.com

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