Caracas, August 21, 2022 (venezuelanalysis.com) – Venezuela has significantly ramped up its petroleum coke (petcoke) sales to Indian companies.
According to Reuters, cement companies in India received 160,000 tonnes of petcoke between April and July, with cargoes of at least 80,000 more expected in August. The Asian giant started importing Venezuelan petcoke in 2022 after previously relying on the US and Saudi Arabia as suppliers.
The Venezuelan exports have hovered around US $220 per tonne, some 5 to 10 percent below market price, as Caracas seeks international trade partners while heavily targeted by US sanctions.
The South American nation has accumulated large stockpiles of petroleum coke, which is a byproduct of oil refining or upgrading. A study from the Venezuelan Academy of Physical, Mathematical and Natural Sciences found that every barrel of upgraded heavy crude from the Orinoco Oil Belt yields 25 kilos of petcoke. Most current reserves were built prior to US sanctions, which forced state oil company PDVSA to lower upgrading and prioritize its flagship Merey export blend (16°API).
The high-carbon petroleum coke is used as an energy source from its combustion and its demand has grown amidst rising coal and fuel prices on a global scale.
Though more expensive than coal, petcoke is a more efficient energy source. It is widely used by the cement industry as the toxic sulfur dioxide (SO2) emissions are absorbed by limestone.
India uses an estimated 27 million tonnes of petcoke per year and is the world’s largest consumer. Indian corporations Ramco Cements, JSW Cement and Orient are among the main purchasers of Venezuelan coke.
Ramco CFO S. Vaithiyanathan told Reuters that the product is of high quality and with low sulfur content as the Caribbean country threatens to displace traditional suppliers. Other significant buyers of the oil industry byproduct include Turkey and China.
The higher volume of exports has caused reported disruptions at the country’s main export hub in eastern Venezuela. However, the operational logjam was alleviated with the opening of a new terminal operated by privately owned Maroil Trading. Industry experts claim that Venezuela could boost its market presence even further by addressing infrastructure deficiencies.
The estimated 300,000-400,000 tonne-per-month petcoke sales provide some relief as the country’s crude production stagnates under the weight of crushing US sanctions.
Since 2017, Washington has levied financial sanctions, an oil embargo, secondary sanctions and a bevy of other measures against Venezuela’s most important industry. The US Treasury Department likewise targeted swap agreements and key imports to keep crude operations running.
Oil output fell dramatically as a consequence of the unilateral measures, from nearly 2 million barrels per day (bpd) in mid-2017 to decades lows under 400,000 bpd three years later. Production nearly doubled in 2021 but PDVSA has struggled to meet ambitious goals set. Output has hovered around 700,000 bpd and receded to 661,000 bpd in July.
Caracas had previously turned to New Delhi as a prospective trade partner following the January 2019 oil embargo. The Nicolás Maduro government reportedly considered crude-for-medicines deals as possible avenues to bypass sanctions. However, the Trump administration threatened Indian corporations, including refining giant Reliance Industries, against dealing with Venezuela.
The US Treasury Department has not explicitly targeted Venezuelan petrochemical and oil byproduct exports but has not issued exemptions either, forcing PDVSA to offer discounts in order to attract customers.
The threat of running afoul of wide-reaching US sanctions has kept international corporations from purchasing Venezuelan petroleum coke. According to Argus Media, Turkish cement would not import from the Caribbean nation at discounted rates for fear of jeopardizing cement sales and other business with the US.