Venezuela Imports Iranian Crude as Exports Recede

The Maduro government is also looking to secure investment by selling shares in joint oil projects to private investors.

Caracas, May 15, 2022 ( – Venezuela has begun importing crude oil as part of a wide-reaching swap deal with Iran.

According to Reuters, at least 200,000 barrels of Iranian oil were discharged at the Cardón refinery in April. Another 400,000 arrived this week at the Jose terminal in eastern Venezuela aboard the Dino I very large crude carrier (VLCC). The Dino I will transport Venezuelan fuel oil for a unit of the National Iranian Oil Company (NIOC).

The discharged oil is reportedly of a similar quality to Venezuela’s Mesa 30 light crude and is needed by refineries to produce gasoline and diesel.

Tehran has emerged as a key ally to help the South American country’s oil industry recover under significant US sanctions. Iranian Oil Minister Javad Owji visited Venezuela in early May to “deepen cooperation in energy matters” between the two nations.

Venezuela’s main Middle Eastern ally has played a key role in tackling fuel shortages. After sending a number of fuel shipments in 2020, it supplied materials and expertise to kickstart several refineries, including Amuay and Cardón which form the Paraguaná Refining Complex in Falcón state, the largest in the hemisphere. Iranian state news agency IRNA reported a €110 million deal signed during Owji’s visit to bring El Palito refinery in Carabobo state to full capacity.

The Middle Eastern country has additionally assisted in the recovery of crude production. In September 2021, Caracas and Tehran struck an oil-for-condensate swap agreement. The condensate allows Venezuela to blend its extra-heavy crude into exportable grades, thus boosting the industry’s output and exports.

The latest OPEC monthly report placed the Caribbean nation’s April output at 707,000 barrels per day (bpd), as measured by secondary sources, which represented a 14,000 bpd increase compared to March.

The numbers reported directly by Venezuelan state oil company PDVSA stood higher at 775,000 bpd, up from 728,000 bpd the previous month.

However, oil exports fell for a second consecutive month, by 8 percent compared to March, as PDVSA remains hampered by poor crude quality and shipment delays. According to tanker tracking data, China remains the main destination for Venezuelan crude cargoes.

Reuters likewise reported that the oil industry is accumulating inventories of the lower quality diluted crude oil. A lack of storage space has forced PDVSA to cut back production in recent times.

Though production has steadily grown after hitting historic lows in the second half of 2020, the industry’s recovery remains significantly hampered by harsh US sanctions. Since 2017, Washington has levied financial sanctions, an oil embargo, secondary sanctions and a raft of other measures meant to strangle Caracas’ main source of income.

Washington’s unilateral coercive measures have been denounced by a number of multilateral organizations and solidarity collectives, as well as US representatives.

On May 10, a group of 18 House Democrats, led by Raúl Grijalva (D-AR) and Jesús “Chuy” García (D-IL) penned a letter urging the Biden administration to “lift all U.S. financial and sectoral sanctions that exacerbate the humanitarian situation.”

“The suffering of the Venezuelan people is a tragedy. (…) numerous studies have shown that U.S. sanctions have been one of the leading causes,” the text reads.

An unexpected trip to Caracas by a White House delegation in March raised the prospect of sanctions relief to resume supplies of Venezuelan extra-heavy crude to US refineries in an attempt to offset the impact of blocking Russian hydrocarbon imports. Venezuela supplied some 500,000 bpd to refineries in the Gulf of Mexico before the January 2019 embargo.

However, talks were paralyzed following bipartisan backlash from foreign policy hardliners.

The US Treasury Department is currently weighing an expanded license that would allow Chevron to expand its operations in Venezuela. If granted, the California-headquartered company would be able to run operations in mixed ventures with PDVSA as well as receive oil cargoes as debt payment.

Oil service companies including Schlumberger and Haliburton are likewise lobbying for sanctions waivers that would see them ramp up drilling operations in a number of joint projects. The firms reportedly have drilling rigs stored in Venezuela that could offer a significant boost for production. The country currently has no active rigs.

In its search for investment, the Venezuelan government is set to put “5 to 10 percent” of shares available to private sector actors in a number of public companies, including mixed oil ventures. President Maduro made the announcement on Wednesday but offered no further details. PDVSA itself was not included on the list.

Current hydrocarbon legislation stipulates that PDVSA hold a 60 percent or larger stake in all joint enterprises. However, authorities could attempt to change shareholder composition by using the contentious “anti-blockade law.” Business guilds and oil corporations have also been lobbying for legislative reforms that would increase the private sector benefits, reversing efforts by the former Hugo Chávez government to reinforce the state’s role in the nation’s key industry.