Venezuela Replaces Oil Exports to US
WASHINGTON, DC – February 28, 2019
US sanctions have led to a sharp reduction in the supply of Venezuelan oil to the US, but failed to bring down all of Caracas’s oil exports. Venezuela is compensating for losses in the US market with supplies to India and EU countries.
After the imposition of sanctions by the US, Venezuela redirected oil exports to other countries - EU countries and India, according to the Wall Street Journal, data from the research company Kpler, and statements from the Ministry of Petroleum of Venezuela.
After the imposition of sanctions by Washington at the end of January, the Venezuelan PDVSA halted oil supplies to the U.S. market, where most of the extracted resources were traditionally sold. According to the US agency EIA, from the late 1990s to the early 2000s, the US imported from Venezuela an average of 1.5 million to 1.9 million barrels of crude oil per day. Later, however, imports of Venezuelan oil began to decline. In January 2017, Venezuela supplied 749,000 barrels to the US per day. In January 2018, volumes fell to 528,000 barrels.
On January 28, 2019, the US imposed sanctions against the Venezuelan PDVSA. American companies buying Venezuelan oil were obliged to transfer payment to a blocked company account in the US, to which the current President Nicolas Maduro and his administration do not have access. This was followed by a sharp drop in oil supplies to the United States. According to Kpler, exports to the US fell from 484,000 barrels per day in January to 149,000 barrels per day in February.
As the WSJ wrote in early February, this led to the filling of oil storage facilities in Venezuela and the cessation of the movement of tankers off the coast of the country. From December to January, total oil exports fell by more than 10%. The estimates provided by the WSJ were also confirmed by the International Energy Agency (IEA) in a report released on February 13: The agency announced a drop in Venezuelan oil exports due to sanctions.
However, on February 27, the country's oil minister, Manuel Quevedo, stated that there was no critical reduction in exports. "The production and export of [oil] Venezuela did not fall under the influence of US sanctions against the country," Bloomberg quoted him as saying. According to the minister, overseas oil supplies in February were at the level of 1.2 million barrels. per day. The Kpler estimates given by the WSJ are somewhat different from the Quevedo data. However, the company also assumes that exports remain at 1.1 million barrels per day; OPEC publishes similar statistics.
According to Quevedo, the reduction in oil shipments to the US was offset by sending tankers to other countries, including India. According to Kpler, deliveries to India in February increased by 40,000 barrels per day. In mid-February, Quevedo announced plans to expand oil exports to India. “We sell more than 300,000 barrels per day to indian buyers. We want to double this amount, ”the Minister said about Caracas’ plans. One of the Venezuelan oil consumers in India is Nayara, which owns a number of refineries and a network of gas stations. At 49.13%, the company is owned by the Russian Rosneft.
Despite the fact that EU countries have condemned the Maduro regime and expressed support for the self-proclaimed President Juan Guaido, they did not stop buying Venezuelan oil. Deliveries of raw materials to the UK in February increased by 11,000 barrels per day. Export is also carried out to refineries in Norway, Sweden and Spain. This is confirmed by data from the FleetMon website, which monitors sea traffic.
Some European consumers, however, refrain from buying Venezuelan oil because of the risk of sanctions. Thus, WSJ sources in Eni, Italy, said that the company has so far stopped purchasing raw materials from Venezuela.
Washington directly threatened countries planning to increase oil purchases in Venezuela. On February 12, Advisor to the US President John Bolton posted on Twitter a link to a Bloomberg article that cited the words of the Minister of Oil of Venezuela about plans to expand the supply of raw materials to India. “Nations and firms that support Maduro’s theft of Venezuelan resources will not be forgotten. The United States will continue to use all of its powers to preserve the Venezuelan people’s assets and we encourage all nations to work together to do the same, ”Bolton commented on Caracas’ plans.
Centro Estratégico Latinoamericano de Geopolítica (CELAG) previously estimated Venezuela’s economic losses due to sanctions in the period since 2013 when Maduro came to power until 2017 at $350 billion. The Russian Ambassador to the UN, Vasily Nebenzia said that the blocking of assets of Caracas in the US and the UK because of the recent sanctions has cost Venezuela $30 billion.