Iranian fuel to reach Venezuela next week

Venezuela is scheduled to receive the first of three oil product cargoes from Iran next week, reinforcing energy ties between the two Opec countries in defiance of US sanctions.

The three tankers are carrying a total of up to 832,000 bl, likely including gasoline. The Forest is due to arrive on 28 September, the Fortune on 1 October and the Faxon on 4 October, according to vessel-tracking data.

The cargoes are expected to unload at the El Palito and CRP terminals, according to PdV officials. El Palito has emerged as a key distribution hub into central Venezuelan states and for cabotage to Carenero, near Caracas. But PdV has nonetheless struggled to restart the 140,000 b/d El Palito refinery on the site.

The three Iran-flagged tankers were among five that delivered gasoline and alkylate blendstock to Venezuela in late May and early June.

In a parallel development this month, the Iran-flagged VLCC Horse delivered condensate to Venezuela. The tanker's transponder is apparently shut off, so reports that it loaded Venezuelan heavy crude for marketing in China could not be confirmed.

The US administration has denounced the growing energy cooperation between Tehran and Caracas, but has not intervened to stop shipments carried aboard Iranian-flagged tankers. 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. But shippers based in the UAE, Oman and the UK later claimed ownership of the cargoes and asked a US federal court this week to dismiss a federal indictment alleging the cargoes belong to Iran.

Diesel cut-off looms

The new Iranian deliveries come on the eve of US plans to cut off a sanctions exemption for diesel which European firms Repsol and Eni and India's Reliance supply to PdV under swap and debt-related transactions currently permitted under the sanctions rules. The low-sulfur diesel imports go toward already fragile power generation, public transport and some food distribution. Without the crude swap mechanism through which PdV pays them, Repsol and Eni are likely to reduce some 300mn cf/d of natural gas production from Venezuela's offshore Perla field. The Perla gas supplies Cardon, residential users in western Venezuela and power plants.

PdV used to supply almost all of the domestic oil market from its 1.3mn b/d refining system. But as its equipment started deteriorating over the past decade, the company increasingly relied on imported US gasoline and components — until the US imposed oil sanctions in January 2019.

Inside Venezuela, the gasoline deficit has eased somewhat, at least in the capital, thanks to limited production from state-owned PdV's 305,000 b/d Cardon refinery in Falcon state.

By Patricia Garip