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Caracas exploring Chinese, Russian payment systems

  • Spanish Market: Crude oil, Oil products
  • 17/07/19

Venezuela's government is holding talks with Russian and Chinese central banks on adopting alternative financial services systems that would facilitate evasion of US sanctions aimed at removing Venezuelan president Nicolas Maduro.

Caracas is currently hampered from carrying out international financial transactions because they are routed through Belgium-based financial services provider Swift, which is the standard global system.

The sanctions have dealt a sharp blow to Venezuela's national oil company PdV as it struggles to buy and sell oil and equipment.

The US started levying financial sanctions on Venezuela in August 2017, and since then Washington has gradually tightened them. In April 2019, the US sanctioned Venezuela's central bank, a move that took full effect for US banks on 17 May. In late January 2019, the US also imposed oil sanctions on PdV.

According to Venezuelan government officials, the central bank parties are currently discussing the advantages of adopting China's CIPS and Russia's SPFS systems as potential alternatives to Swift.

The discussions seek "to neutralize the impact of US financial sanctions that are hindering PdV's ability to export and import oil, and conduct financial transactions including collecting and paying debts, and transferring funds internationally without fear of seizure by the US government," a presidential palace official told Argus.

CIPS and SPFS are designed to operate autonomously without the need for US corresponding banks or pass-through accounts. The more established CIPS system was set up in 2015 to facilitate Chinese banking activities abroad and promote the rise of the yuan. The less advanced Russian system works mostly within Russia.

The two alternative payment systems are seen as immune to US government pressures aimed at forcing US and non-US banks to stop doing business with Venezuela and other sanctioned countries, including Iran and Russia, a central bank official in Caracas said.

If the US expands sanctions, Venezuela will "probably will quickly adopt both the SPFS and CIPS payments systems because most of PdV's oil exports and imports are now with Russian and Chinese clients and suppliers," the palace official said.

Venezuela's effort to bypass the western banking system is likely to face the same obstacles as did Iran, a fellow sanctioned Opec member that has tried and failed to establish steady and reliable alternative channels for financial transactions, which are mostly carried out in US dollars.

Government in exile

The central bank talks are taking place as Venezuela's US opposition sets up a parallel central bank board in exile in anticipation of eventually taking power in Caracas. Juan Guaido, the National Assembly speaker whom the US and over 50 other countries recognize as interim president, is campaigning for Maduro to step down and make way for a transition government. Maduro, who is supported by Russia, China, Turkey and Cuba, has refused to leave so far. Negotiations brokered by Norway in Barbados this week have not broken the impasse, although a tentative deal to hold elections in nine months is on the table.

The new five-member ad hoc central bank board of directors appointed by Guaido includes economist and former central bank president Ruth de Krivoy, current Harvard University research fellow Ricardo Villasmil, veteran private banking executive Manuel Rodríguez, and former central bank managers Nelson Lugo and Guaicoima Cuius.

The parallel board has been tasked with administrating Venezuelan international assets, mainly PdV's US refining subsidiary Citgo, which is already managed by a parallel board appointed by Guaido. The new bank board will also advise Guaido's ad hoc solicitor general Jose Ignacio Hernandez in preparing to restructure more than $150bn of foreign debt owed by the Venezuelan government and PdV.

Local Russian and Chinese diplomatic officials confirmed official contacts between their respective central banks and Venezuela's central bank, but declined to comment on any discussions.

The US administration prevailed on Swift last year to stop providing services to the Iranian central bank and private banks in Iran that were placed on the US sanctions list. Iran is working with the EU to develop an alternative financial intermediary system.

Washington has vowed to block attempts by Iran and other countries to find ways to bypass the effect of US financial sanctions, except for trade in food and medicine. There is no such exception for Venezuela so far.


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06/02/25

Crude Summit: Argentina coexisting with TMX crude line

Crude Summit: Argentina coexisting with TMX crude line

Houston, 6 February (Argus) — Competition into the western US from the expansion of Trans Mountain's 890,000 b/d crude pipeline system in western Canada was not as severe as feared by Argentina producers. There is "still a place" for Argentina's Medanito crude on the US west coast, Francisco Villamil, executive trading manager at upstream producer Vista, said at the Argus Global Crude Summit Americas in Houston. Argentina producers were "pretty concerned" when the expansion went into service last May. At first, they felt price effects of the increased supply in the Pacific basin, but differentials stabilized and 50pc of TMX exports now go to Asia. The TMX system connects producers in Alberta to the docks at Burnaby, adjacent to Vancouver, British Columbia, and its capacity roughly tripled when the 590,000 b/d Trans Mountain Expansion (TMX) went into service. TMX has been a popular outlet for shippers, both for selling to US west coast refiners and also for producers looking to bypass the US altogether and target Asian countries. Since the TMX expansion came on line, the US west coast has received about 159,000 b/d from Vancouver, or 48pc of total Vancouver crude exports, according to Vortexa. Most of the remaining Vancouver exports went to China. Argentina averaged a record-breaking 717,100 b/d of crude production in 2024, the country's energy secretary reported. By Eunice Bridges Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Crude Summit: Tariffs risk drying up forward trading


06/02/25
06/02/25

Crude Summit: Tariffs risk drying up forward trading

Houston, 6 February (Argus) — US tariffs aimed against its largest trading partners creates both opportunity and uncertainty for traders, but the threat alone also dissuades trading oil too far forward. "It's not just whether tariffs come in, but it's the threat of tariffs coming in," Equinor vice president of crude trading and refinery optimization Simon James told delegates at the Argus Global Crude Summit Americas in Houston, Texas, on Thursday. The expectation of tariffs has the risk of drying up some forward trading. "People will be nervous about committing too far forward," said James, highlighting the severity of the threats made by US president Donald Trump against its North American neighbors. "The fact that the initial tariffs around Canada and Mexico were so punitive at 25pc, how someone handles that risk ... is extremely difficult," said Simon. "I think that's something the market is starting to work through and I don't think there's a good answer yet." Buying patterns have already been disrupted with traders re-thinking traditional flows in light of the potential tariffs, whether they come or not. "Already today, traders and people who are trying to connect the dots, are looking into how they should change their buying patterns," SOCAR chief trading officer Taghi Taghi-Zada said on the panel. While the actual imposition of tariffs would be an important milestone, he said, the fact people are speaking about them with confidence has already affected the markets. Traders on the edge of information flow will be better equipped to make some kind of prediction and manage exposures, said Taghi-Zada, while Barbara Harrison, vice president of crude supply and trading at Chevron, expects news headlines are what will continue to drive volatility in the near term. "For us as traders, it also creates market opportunity, but it certainly does create a lot of market uncertainty," said Harrison. "We're going to continue to have that long-term fundamental drive on markets, and short-term headline drive on markets," said Harrison. She expects the short-term to be centered around tariffs and conflict in the Middle East and long-term related to Chinese demand and supply from Opec+ nations. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Crude Summit: US to remain top crude producer


06/02/25
06/02/25

Crude Summit: US to remain top crude producer

Houston, 6 February (Argus) — The US is likely to remain the world's top crude producer for some time to come, according to shale executives at the Argus Global Crude Summit Americas in Houston, Texas, today. "In the foreseeable future, I don't really see a lot of change," said Shannon Flowers, director of crude and water marketing at Coterra Energy. There is still enough high-quality acreage to go after, while efficiency gains around faster drilling times and targeting longer wells are also helping to drive output gains. "There's a lot of creativity that goes on in trying to understand how we can do more with less," Flowers said today at the event. While the rig count is down 20pc over the last two years, production has grown by more than 1mn b/d. "Doing more with less is kind of a common theme," Flowers said in reference to operations at Coterra and across the industry. "I expect that to continue." While the Permian has dominated all the attention of late, the offshore Gulf of Mexico is likely to be an important driver of output going forward, with several projects starting up this year. Other regions such as the Rockies, Wyoming and possibly Utah could also see some growth. A recent round of mergers and acquisitions that saw $300bn of upstream oil and gas deals inked has further to run, says John Argo, vice president for the Williston Basin at Continental Resources. "There will continue to be more consolidation," Argo said. Scarcity with regard to remaining high-quality acreage means that valuations will continue to climb, he said. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Crude Summit: Asset-backed oil trades on the rise


06/02/25
06/02/25

Crude Summit: Asset-backed oil trades on the rise

Houston, 6 February (Argus) — Asset-backed trading is becoming commonplace in the oil industry as companies up and down the supply chain bring capabilities in-house, delegates heard at the Argus Global Crude Summit Americas in Houston, Texas, today. "Traditionally, long term hedging was popular, and it still is, but in general we've seen a move towards the front end of the curve," said CME Group's managing director and global head of energy and environmental products Peter Keavey. "The risks are really in the prompt," said Keavy. "We're seeing a lot of hedging in the short term [and] that also is reflective of asset-based optimization." HC Group managing partner Paul Chapman has also noticed a continued shift in trading by banks, which either exited or scaled down operations in 2014 and 2015, to those directly in the industry. "I would argue that pretty much every single business around the world — producer, miner, refiner, retailer of fuels and major — is on some spectrum of developing some asset trading," said Chapman. "And it's driven by a need to capture more margin." Changing trade flows have naturally had a bearing on who becomes more involved in individual markets. "Over the past five years, European players have more and more exposure to US molecules, whether it be crude oil or natural gas," said Keavey, which has driven the growth of trade of WTI, RBOB, gasoline, and heating oil in international markets. Changing energy policy, and policies to reach other political objectives, have a tendency to shape energy flows, whether they are intended or not, the speakers said. The Russian-Ukraine conflict is a prime example, and there are clear signs that US president Donald Trump's second term in office will do the same. "As this world gets more shaped by trade wars and there's more and more government intervention, that itself starts to break down some of the fundamentals of how some of these markets work," said Chapman. Keavey expects Canadian crude to continue to flow even under a Canada-US trade war, but "the question is, what disruption happens to the pricing?" By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Crude Summit: Discipline still reigns in US upstream


06/02/25
06/02/25

Crude Summit: Discipline still reigns in US upstream

Houston, 6 February (Argus) — Spending restraint remains the guiding force for the US upstream sector, according to Jesse Thompson, senior business economist at the Federal Bank of Dallas. "The industry is playing it very cautiously," Thompson said today at the Argus Global Crude Summit Americas in Houston, Texas. "Capital discipline is still very much the order of the day." What has surprised many is that output keeps going up, despite the fact that the rig count continues to retreat. That can be attributed to productivity gains, such as the practice of speeding up drilling times, and targeting of longer lateral wells, with fewer people employed in the industry, he said. US crude production growth is seen ending this year up 200,000 b/d, compared with 300,000 b/d in 2024, Thompson said. Despite the perception by some that all the low-hanging fruit has already been picked and productivity gains will ease up, they continue to defy expectations. "And then every year they beat their own production numbers," Thompson said. Turning to the domestic economy, consumption growth is running above trend based on the latest data, Thompson said. And the consensus among forecasters is that GDP growth is seen around 2pc this year. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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