Venezuela and Iran Deepen Cooperation to Overcome US Sanctions

Caracas, May 4, 2022 (venezuelanalysis.com) – Venezuelan President Nicolás Maduro held a meeting with Iranian Oil Minister Javad Owji in Caracas to strengthen energy cooperation as the two oil producing countries ramp up efforts to offset US sanctions.

On Monday, Maduro hosted Owji and other Iranian officials in Miraflores Palace where they held a “productive meeting” to “deepen the ties of brotherhood and cooperation [between the nations] in energy matters.”

In a Twitter post, the Venezuelan mandatary expressed his gratitude for Iran’s ongoing support in the Caribbean country’s struggle to recover the economy under US sanctions. President Maduro pledged “to continue advancing along the path of mutual benefit and complementarity for our peoples.”

For his part, Owji praised the countries’ long history of bilateral relations, dating back to the Hugo Chávez government (1999 – 2013). “We want to use all our capacities to develop joint relations and cooperation,” he wrote on Twitter.

The Iranian official likewise held work meetings with Venezuelan Vice President Delcy Rodríguez and Oil Minister Tareck El Aissami.

“The countries reviewed further opportunities to ramp up bilateral cooperation in the oil, gas and petrochemical sector as well as multilateralism and the Caracas-Tehran perfect alliance within the Organization of Petroleum Exporting Countries (OPEC),” read a statement by state oil company PDVSA.

The text emphasized that Minister Owji expressed Iran’s commitment to continue building “routes and mechanisms to overcome the unilateral coercive measures [sanctions] imposed by the US government and its allied countries against the Venezuelan people.”

According to Iran’s Press TV, the high-level official arrived unannounced in Venezuela on April 30, and visited the Paraguaná refining complex in Falcón state, western Venezuela, alongside PDVSA president Asdrúbal Chávez.

Owji’s visit to Venezuela came just weeks after a US delegation held talks with President Maduro in Caracas as global oil prices jumped due to the Russia-Ukraine war. However, the Biden administration later clarified that sanctions relief against Caracas’ oil sector was not on the immediate agenda.

Iran, a major oil producer, and Venezuela, home to the world’s largest proven oil reserves, have both been slapped with sanctions by the White House in recent years. In November 2018, the former Trump administration reimposed sanctions on Iran’s oil, petrochemicals, shipping and financial sectors following withdrawal from the landmark 2015 nuclear deal. However, the Iranian government recently said that the country’s crude output had recovered to pre-sanctions figures with 3.8 million barrels per day (bpd). The last OPEC report placed Tehran’s March output at 2.546 million bpd as measured by secondary sources.

Venezuela has been under a similar maximum pressure campaign since 2017 when the US Treasury Department levied financial sanctions against PDVSA followed by an oil embargo in 2019 as well as secondary sanctions against shipping companies and other intermediaries.

Washington’s coercive measures saw PDVSA cut off from international markets and foreign companies were no longer able to operate in joint oil ventures. As a result, crude production fell from 1.9 million bpd in 2017 to less than 500,000 bpd by the end of 2020.

Venezuela has also dealt with acute fuel shortages after Washington seized Houston-based oil subsidiary CITGO in early 2019 blocking the country from receiving fuel cargoes and much-needed revenues. The situation worsened after the US banned diluent and fuel imports and put an end to crude-for-diesel swaps in October 2020.

In light of harsher US sanctions, Venezuela and Iran began to extend their political alliance and increase energy cooperation, with Tehran offering assistance in recovering the oil industry.

Throughout 2020, Iran supplied Caracas with at least five fuel shipments framed in a “perfect trips” alliance signed that year. The Middle East nation likewise sent catalysts, spare parts and technicians to revive gasoline production units at the Amuay and Cardon refineries, located in the Paraguaná refining complex.

Cooperation between the allied nations continued to expand with an oil-for-condensate swap deal signed in September 2021, totaling seven cargoes received by Venezuela since then. The Iranian light crude has been key to turning PDVSA’s extra-heavy crude into exportable grades helping the South American country achieve a moderate oil output recovery. OPEC placed Caracas’ March output at 697,000 bpd, according to secondary sources.

Early this year, the two countries signed a memorandum of understanding for development and renovation projects in the Venezuelan oil and gas industry. The new deal was reached during the VI Summit Gas Exporting Countries Forum (GECF) in Doha, Qatar.

In recent years, Venezuela has strengthened trade deals with key allied countries to counter sanctions amidst increasing geopolitical changes that threaten the US hegemony. On April 29, the Maduro government received Turkey’s Foreign Minister Mevlut Cavusoglu in Caracas to celebrate the countries’ third Joint Cooperation Commission.

Caracas and Ankara signed eight agreements in several fields, including industries, fishing, aquaculture, education, health and sports, while pledging to expand cooperation and trade in other areas as well.

Edited by Ricardo Vaz in Caracas.