More Iranian gasoline cargoes head to Venezuela: Update

Adds details on the condensate shipment, comments from Chevron

At least three Iranian-flagged tankers are on their way to Venezuela to provide a brief reprieve to the South American Opec member's critical gasoline shortages.

The cargoes are believed to be aboard three Handysize tankers, the Forest, the Fortune and the Faxon, which vessel tracking show loaded approximately 275,000 bl each in Iran in late August and early September and are now in the south Atlantic Ocean.The three tankers were among the five vessels, all Iran-flagged and owned, that delivered 1.5mn bl of gasoline and alkylate — an octane-enhancing gasoline blendstock — to Venezuela in late May and early June.

Both parties have commercial reasons for the trade. For Venezuela the supply will briefly alleviate a severe fuel shortage ahead of politically sensitive legislative elections in December. For Iran the shipments help Iranian state-owned NIOC, which has struggled to sell or store oil domestically because of Covid-19 containment measures and US sanctions that cut Iran's exports to nearly every destination.

But the gasoline shipments also have the political significance of needling Washington, which has boasted of the success of its sanctions policies against both Tehran and Caracas.

The three tankers would provide "only a few weeks worth of gasoline" consumption in Venezuela, the US State Department's special Iran and Venezuela envoy, Elliott Abrams, said today. "If you wanted to prevent the return of the kind of shortages that are now so common in Venezuela, you would have had to leave Iran yesterday with another three tankers — a shuttle service, which we have not seen," he said.

The US says Venezuela is paying for the shipments with gold from its central bank reserves. Neither Caracas nor Tehran disclosed terms of the trade.

The US' main effort is to ensure no third party participates in the Iran-Venezuela oil trade, Abrams said. "We are making sure that other shippers, insurers, ship owners, ship captains, stay away from that trade."

No apparent US intervention

Abrams' comments acknowledge that the US is not prepared to intervene to stop deliveries aboard Iranian-flagged and owned tankers. Iran last year reacted to the seizure by the UK marines of an Iranian oil tanker, the Grace 1, near Gibraltar by seizing a UK-flagged vessel in the Mideast Gulf. The UK vessel was eventually released once the Grace 1 was allowed to leave Gibraltar, despite US attempts to arrest its cargo.

The US Justice Department said last month it took custody of 1.16mn bl of Iranian gasoline headed to Venezuela aboard four Greek-owned, Liberia-flagged tankers. The US transferred the fuel to other tankers to transport it to the US. But shippers based in the UAE, Oman and the UK have since stepped forward to claim ownership of the cargoes.

An Iranian tanker on 13 September delivered 2mn bl of condensate at Venezuela state-owned PdV's Jose terminal, to be used to dilute Venezuela's extra-heavy Orinoco crude. PdV joint ventures expected to receive some of the Iranian condensate include PetroSinovensa, PetroMonagas, PetroPiar and PetroIndependencia. Chevron, which holds a 30pc stake at PetroPiar, said it "does not participate in any deal with Iranian origin products." Chevron has a waiver from US sanctions that allows it to preserve and maintain its Venezuelan assets. The waiver has been repeatedly renewed and next expires on 1 December. Chevron said it will continue to conduct its business in compliance with US sanctions and remains hopeful the waiver will be extended again.

The US administration is still weighing an end to informal exemptions that allowed Spanish oil firm Repsol, Italy's Eni and India's Reliance to supply Caracas with diesel in exchange for crude from PdV in debt and swap-related transactions.

"We are looking very carefully at the diesel question," Abrams said. Thai bitumen trading firm Tipco said recently it will halt purchases of Venezuelan crude by the end of November to avoid the risk of US sanctions.

Proponents of continued sanctions exemptions for the diesel-for-crude swaps argue that Venezuela is using diesel for power generation, thus qualifying for a humanitarian exemption from US sanctions. But Abrams said that Venezuela continues to export the much needed diesel and other oil products to its main political ally Cuba.

By Haik Gugarats