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Venezuela Scrambles To Find Oil Tankers As It Expects Sanction Relief

Venezuela is reportedly looking for oil tankers in anticipation of sanction relief from Washington.

Reuters cited three unnamed sources and a document as saying the state-owned oil company PDVSA was in talks to buy several oil tankers after Washington earlier this month sent a high-level delegation to Caracas to discuss potential sanction relief.

According to the sources, officials from the maritime arm of PDVSA had met with several tanker owners who had expressed their readiness to receive Venezuelan oil or oil products as payment for their vessels.

"PDVSA's tanker fleet is too short for any increases in oil production for domestic refining or exports," one of the Reuters sources said.

After the U.S. visit to Caracas earlier this month, there were reports that the Washington officials had asked Venezuela to commit certain volumes of crude for U.S. refineries in exchange for sanction relief. The talks in Caracas themselves ended without an agreement of any sort.

Venezuela produces heavy crude, which is a necessary part of the oil mix at U.S. refineries. With the ban on Russian oil and fuel imports, the U.S. has remained reliant on only Canadian heavy crude. Canada is only too happy to supply it, but perhaps it cannot do so fast enough.

Related: Saudi Aramco Further Tightens Its Ties To China

The United States broke off diplomatic relations with Venezuela in 2019 after national elections that cemented Nicolas Maduro as president. Sanctions followed, targeting specifically Venezuela's oil industry.

However, Washington could not completely stop Venezuelan oil exports despite deepening sanctions, with China and Russia coming to the rescue. Venezuela continues to export most of its oil to China.

For Caracas, bans and self-sanctioning on Russian oil could be the opportunity of a regime's lifetime. With few large producers of heavy crude, its oil could become a lot more essential than before, as demonstrated by the U.S. visit.

However, the chances are that the White House will be cautious in the promises it makes, lest it draws criticism for going back on punitive measures aimed at teaching Caracas a lesson in democracy. Although it could be argued that the lesson has failed to produce any results, a 180-degree turn is likely to be met with opposition within the U.S.

By Irina Slav for Oilprice.com

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  • Terry Du on April 01 2022 said:
    Heaven forbid the USA resumes construction on the Keystone XL pipeline
  • Mamdouh Salameh on April 01 2022 said:
    If Venezuela’s current crude oil production is estimated at 1.2 million barrels a day (mbd) from which it exports around 1.0 mbd, such a level of production and exports doesn’t warrant looking for tankers in anticipation of sanction relief from Washington.

    It will take at least 2-3 years perhaps longer before Venezuela is able to lift its current production to the 2016 level of 2.4 mbd. Moreover the bulk of current Venezuela crude exports goes to China part of which is dedicated for payment of loans China has extended over the years to the South American country.

    Venezuela shouldn’t trust the United States’ word on lifting the sanctions until they are totally lifted. Until this happens, not a single barrel of Venezuelan crude will go to the United States.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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