Venezuela Restocks Fuel with US-Licensed Trading House Support

Trading houses, which swiftly became key purchasers of Venezuelan crude following the relaxation of U.S. oil sanctions in October, are now facilitating the supply of motor fuels and diluents to the state-owned oil company PDVSA for its heavy oil production, according to documents and data sources.

In anticipation of the 2024 presidential election, Venezuela has strategically prioritized fuel imports to stave off a recurrence of gasoline and diesel shortages that previously fueled protests. Recent documents and insider information reveal that approximately two months ago, Washington granted a six-month license that largely lifted sanctions on Venezuela's oil industry. This authorization allows for the export of crude and gas to chosen markets and permits fuel imports from almost any source, contingent on the country adhering to a commitment to conduct a fair presidential election.

PDVSA's primary objective is to rebuild depleted inventories, addressing the need for routine imports and fortifying the nation's stocks against potential surges in demand. These new supplies supplement prior oil swaps negotiated by PDVSA with joint venture partners, including major oil players Chevron, Eni, and Repsol, as well as agreements made in recent years with partners like Iran.

As of now, both PDVSA and Venezuela's oil ministry have not provided immediate responses to requests for comments on these developments.

Motorists in Venezuela have experienced intermittent shortages of gasoline and diesel in recent years, despite incremental increases in subsidized prices. The scarcity has led households to seek alternative energy sources due to a lack of liquefied petroleum gas for cooking. PDVSA recorded its highest monthly import average since January, bringing in an average of 54,000 barrels per day of heavy naphtha and gasoline blend stock in November. The supplies were provided by Chevron and Repsol. This volume excludes imports of light oil and condensate from Iran, which have declined in the latter half of the year.

Looking ahead, a similar volume of heavy naphtha is scheduled to be received from Swiss-based trader Vitol this month, according to documents, with some negotiations involving cargo swaps. Vitol has also chartered a tanker to collect a 1 million-barrel cargo of Venezuelan heavy crude in the latter half of December.

Since October, Vitol and its competitor Trafigura have been active buyers of Venezuelan crude and fuel oil from intermediary firms. The majority of these cargoes have been destined for China, while Eni and Chevron recently received authorization to supply Indian refiners, as per the available documents and data.