Venezuela’s oil exports remained relatively steady in May, as increased shipments to China offset falling deliveries to US-backed partners, according to vessel-tracking data and internal documents for state oil company PDVSA.
In total last month, 30 vessels sailed from Venezuelan ports, with an average daily load of 779,000 barrels per day (bpd) of crude and refined products, according to Reuters.
Oil byproducts and petrochemicals, amounting to 291,000 metric tons, were shipped abroad.
This stability comes despite the winding down of US-authorised deals following a shift in sanctions policy by Washington.
Sanctions wind-down impacts US and European customers
In March, the US Treasury and State Departments removed authorisations that previously permitted corporations to do deal with sanctioned Venezuelan oil. Firms were given till May 27 to complete transactions.
This policy move impacted Venezuela’s exports to traditional consumers in the United States and Europe.
Notably, PDVSA cancelled certain cargoes bound for its key partner, Chevron, due to payment issues. As a result, supplies to Chevron and India’s Reliance Industries were suspended in May.
Despite these losses, exports did not reduce considerably as intermediaries routed Venezuelan crude to Asian markets, particularly China.
China solidifies top buyer role
Last month, China cemented its position as Venezuela’s largest oil buyer again, taking about 584,000 bpd, up from 521,000 bpd in April.
The US imported around 140,000 bpd, up from 130,000 bpd the month prior, but the modest number is largely due to licensed transactions being rolled out over time.
The last of these transactions authorised by the US was conducted in May, an oil swap involving joint venture partner Maurel & Prom and trading house Vitol.
The official exemptions have expired, hence, no fresh approved cargoes are expected.
PDVSA adapts export strategy amid license expiration
In response to the new regulatory climate, PDVSA began independently exporting Boscan heavy crude to Asia.
Previously, this grade, co-produced with Chevron, was earmarked for refiners in the United States under license arrangements that have now expired.
The state company’s gasoline imports have also surged dramatically, climbing to around 159,000 bpd in May from 94,000 bpd in April.
This move is considered an effort to boost heavy naphtha inventories, a vital diluent for Venezuela’s extra-heavy oil, ahead of potentially tougher sanctions enforcement.
Chevron confirmed that its license has expired while emphasising its continuing compliance with all applicable US laws and sanctions.
The broader industry has remained cautious, as the expiration of US authorisations creates uncertainty for corporations that have previously operated in Venezuela under special rights.
Outlook remains uncertain as sanctions reasserted
Oil exports from Venezuela had increased in the previous months, hitting 900,000 bpd at its peak as activity with US licenses restarted.
The data for May could reflect the temporary inability of the country to increase production and deliveries using this flexible switch of volumes through intermediaries to markets outside the West.
Despite sanctions and limited trade opportunities, exports may not be sustainable.
The Venezuelan oil sector will be heavily influenced by the ongoing political interaction between Caracas and Washington, as well as demand trends in Asia, in the coming months.
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