Venezuela Boosts Crude Exports as India Resumes Oil Purchases

Caracas, January 18, 2024 (venezuelanalysis.com) – Venezuela has recently increased crude and fuel exports boosting 2023’s average to 695,192 barrels per day (bpd), the highest number in four years amidst a mild relaxation of US sanctions.

China’s independent refiners remained the primary destination for Venezuela’s oil, accounting for approximately 65 percent of the country’s total exports, according to data collected by Reuters. The United States followed with 19 percent of shipments, while European countries took 4 percent and several Latin American nations received a smaller share of cargoes.

Higher exports were driven by a December spurt with ships carrying 798,000 bpd of crude and fuel, and 376,000 metric tons of oil byproducts and petrochemicals. A more stable oil production throughout 2023 likewise accounted for the increased sales. However, Venezuelan state oil company PDVSA productivity levels are still low in comparison to the country’s pre-US sanctions era. 

In December, the Caribbean country produced 786,000 bpd as measured by secondary sources from the latest report from the Organization of Petroleum Exporting Countries (OPEC). The figure rose by 7,000 bpd compared to the previous month.

For its part, PDVSA reported 802,000 bpd, almost the same as November’s 801,000 bpd. Venezuelan authorities had set sights on surpassing one million barrels per day but the average in 2023 was 739,000 bpd, although higher than 2022’s 680,000 bpd.

During his annual address to the nation on Monday, President Nicolás Maduro highlighted that oil activity grew by 12.99 percent in the third quarter of 2023, with a 14.60 percent increase in crude and natural gas extraction, leading to a 60.46 percent boost in exports.

“PDVSA, although sanctioned, demonstrated the strength of its internal capabilities that led to overcoming the adversities created by the illegitimate [US] blockade and by mafias that had infiltrated the industry,” said Maduro. Last year, Venezuelan authorities exposed a corruption scheme within PDVSA, allegedly resulting in the loss of billions of dollars.

The Venezuelan leader added that the state oil company closed the year 2023 with an income of US $6.2 billion, significantly higher from 2022’s $3.5 billion. The country’s economy also grew an estimated five percent and growth is expected to reach 8 percent this year with a 27 percent increase in oil revenues projected for 2024.

Maduro highlighted renewed alliances with international energy companies from across the world and the agreement signed in December between PDVSA and Trinidad and Tobago’s National Gas Company (NGC) to develop the Dragon Gas Field, located in Venezuelan waters, with Royal Dutch Shell as the project’s operator. 

Venezuela Oil Minister Pedro Tellechea added on Tuesday that last year’s growth was likewise marked by the rehabilitation of oil wells in the Orinoco Oil Belt, the country’s largest crude-producing area, in partnership with private company Global Energy. 

Starting with financial sanctions in 2017, Washington levied successive rounds of coercive measures against Venezuela’s oil industry. These included an embargo, secondary sanctions and the blacklisting of shipping companies, vessels and other businesses accused of dealing with PDVSA. Since 2019, foreign firms have been forced to wind down operations to maintenance activities.

In May and November 2022, Washington issued licenses for Italy’s Eni, Spain’s Repsol and US oil giant Chevron to swap Venezuelan oil for debt and unpaid dividends. The sanctions waivers responded to a long lobbying process carried out by the companies in the White House but they only allowed limited activities within their joint ventures with PDVSA.

In October 2023, Washington suspended some coercive measures following an electoral agreement between the Maduro government and the US-backed opposition. The Treasury’s Office of Foreign Assets Control (OFAC) issued four licenses, including a six-month reprieve allowing production, investment and sales of Venezuelan oil and natural gas.

The sanctions easing has opened the path for the South American country to acquire inputs for oil and fuel production and to sell its products at market prices to its chosen destinations.

Next in line to ramp up purchases of Venezuelan crude is India. ONGC Videsh Limited (OVL), the overseas arm of India’s state-owned Oil and Natural Gas Corporation Ltd. (ONGC), is currently in negotiations with PDVSA to receive cargoes between January and March. 

The shipments will offset a reported $600 million debt, including interests, accrued during the US sanctions period. According to India’s petroleum secretary, Pankaj Jain, the company is waiting for date confirmation to begin lifting oil.

OVL holds a 40 percent stake in the San Cristobal field, located in the Orinoco Oil Belt, with PDVSA holding the remaining 60 percent. Before US sanctions, India was an active buyer of Venezuelan crude, importing approximately 300,000 barrels per day, mostly by India’s largest refiner Reliance Industries. Since 2021, the company has been pressing the US government for a license to resume imports. 

Since the relaxation of sanctions, Venezuelan oil byproducts are being eyed by US companies as well. Texas-based Global Oil Terminals has reportedly signed a deal with PDVSA to buy six 95,000-barrel cargoes of asphalt with New York-bound shipments beginning this week.

The company’s owner, Florida magnate Harry Sargeant III, told Bloomberg the purchase falls under the US Treasury General License 44, which expires in April, and that future acquisitions include fuel oil and crude. For their part, Venezuelan authorities have not confirmed the dealings or issued any statements.

Edited by Ricardo Vaz from Mérida.