PdV unloading disputed crude cargo

Venezuela's state-owned PdV is unloading a disputed cargo of heavy crude from a UK-flagged tanker stranded in Venezuelan waters since early 2019 because of US sanctions.

PdV's US refining subsidiary Citgo, which is controlled by Venezuela's US-backed political opposition, had been battling in US court to retain possession of the cargo, but any legal claim was seen as having a slim chance of enforcement in Venezuelan territory so long as it remains in the hands of President Nicolas Maduro.

Over 950,000 bl of the diluted Venezuelan crude (DCO) is being transferred from the Gerd Knutsen into storage at PdV's Jose terminal, oil ministry and presidential palace officials confirmed to Argus.

The tanker will be allowed to leave Venezuela after its cargo is unloaded, the government officials said.

DCO is 8°-10°API Orinoco crude diluted with around 30pc naphtha to enable the thick oil to be transported. In Venezuela, the DCO could now be used to blend with lighter domestic grades to produce 16°API Merey grade or upgraded into synthetic crude for export.

The unloading of the vessel is the latest setback for US-backed opposition leader Juan Guaido, who declared an interim government in January 2019 with the ambitious goal of ousting Maduro, setting up a transition government and holding free elections.

The reaction from Guaido's senior ranks was resignation and concern for the safety of the tanker crew. There was no immediate comment from Houston-based Citgo or from the tanker's owner, Knutsen NYK Offshore Tankers (KNOT).

From Caracas, the oil ministry official said PdV will not recognize any liability for the tanker operator's losses during its year-long forced stay in Venezuelan waters. "The problem was created by the sanctions, and the actions of the illegal ad hoc board," the official added, referring to a parallel PdV board of directors appointed by Guaido last year.

In December 2019, Citgo's opposition-controlled board secured an order from a Delaware court to block PdV's attempt to force the tanker captain to discharge the cargo. Maduro ignored the US court order and instructed oil minister and PdV chief executive Manuel Quevedo to unload it, the palace official said.

The official added that the oil was intended for Citgo, which is owned by PdV and which is therefore the legal owner of the oil. The court order is illegal and is not recognized in Venezuela, the official said.

"The ad hoc board Guaido forced on Citgo is illegal, Guaido is a corrupt US puppet and everyone saw what happened this week when the real revolutionary people met him at Maiquetia," the palace official said, referring to Guaido's tumultuous 11 February return to the Venezuelan airport outside Caracas after a more than three-week tour of the EU, Canada and US.

He was physically attacked at the airport and his uncle who accompanied him was detained by Maduro's security forces.

Guaido projects the "illusion of control" over PdV assets outside Venezuela such as Citgo and fertilizer company Monomeros as a result of the support of the US government and courts, but "in reality Guaido and the US courts have no control over anything inside Venezuela," the palace official said.

Despite widespread Western recognition, an escalating suite of US sanctions on Caracas, the Guaido-led movement has lost popular support at home as Maduro remains in power.