Mexico offers to sell gasoline to Venezuela

  • Market: Crude oil, Oil products
  • 15/06/20

Mexico would sell gasoline to Venezuela if that country were to make a request, President Andres Manuel Lopez Obrador said today, despite US sanctions on such trade.

"If they were to make a request, it would be a humanitarian need and we would do it," Lopez Obrador said, specifying that Venezuela had not yet asked.

A Venezuelan presidential palace official told Argus today that the government of President Nicolas Maduro will ask Mexico for gasoline soon.

Venezuela has been in the throes of an acute fuel shortage for months. Recent shipments from Iran have temporarily alleviated the deficit in Caracas, buying time for state-owned PdV to try to repair its main refineries with help from Tehran and Beijing. Venezuela used to import gasoline and blendstock from the US to top off domestic production, but the supply was cut off when Washington imposed oil sanctions in January 2019.

Lopez Obrador said Mexico has a right to sell to Venezuela despite the sanctions.

"Mexico is free. It is an independent and sovereign country," he said. "We do not interfere in the politics of other countries."

Mexico's stance is consistent with its refusal to recognize Venezuela's US-backed opposition leader Juan Guaido as the country's interim president, in place of Maduro.

Mexico is not self-sufficient in gasoline and historically imports most of its supply from the US. Yet domestic gasoline output at state-owned Pemex's six refineries has increased slightly in recent months toward the president's goal of weaning Mexico off of those imports. Mexico imported 304,000 b/d of gasoline in April — almost half January's total because of impacts from Covid-19 prevention measures — and Pemex produced 220,000 b/d.

Lopez Obrador's offer to supply gasoline to Venezuela follows the recent shut down of small Mexico-based brokerages, including Libre Abordo, which had been lifting Venezuelan crude in exchange for food. The oil-for-food deals were associated with Alex Saab, a Colombian-Venezuelan businessman who was detained in the island nation of Cabo Verde on 12 June. Venezuela's foreign ministry confirmed that Saab was acting as a government agent and is seeking his repatriation.

Mexico and Venezuela have long historical ties in the energy sector. The two countries used to supply subsidized oil to Caribbean and Central American countries under the San Jose Pact dating back to 1980.


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