Tuesday, June 30, 2020

Saudi Arabia discusses progress of OPEC deal with Nigeria

 Thursday, October 31, 2019, President Buhari met with Saudi Crown Prince Mohammed bin Salman, on the margins of the Future Investment Initiative (FII) conference in Riyadh. Photo: TWITTER/NGRPresident


Saudi Arabia’s Crown Prince Mohammed and the president of Nigeria Muhammadu Buhari, discussed the progress of the OPEC+ oil production cut deal this week in a phone call, the Saudi Press Agency reported without providing any details about the contents of the call.

Nigeria, along with Iraq, has been lagging in compliance with the production quotas set by OPEC+ in April, aiming to shave off some 9.7 million bpd in oil supply until the end of July. 

In fact, Iraq and Nigeria—especially Nigeria—were so bad at compliance that Saudi Arabia’s Energy Minister had to put his foot down at the last OPEC+ meeting and demand from them that they start cutting production more deeply to improve their compliance rates.

Iraq and Nigeria’s non-compliance with the record OPEC+ cuts in May nearly wrecked the June meeting of the pact, ahead of which the two leaders of the group, Saudi Arabia and Russia, had insisted that there would be an extension by one month to the current level of cuts only if laggards in compliance ensured over-compliance going forward to compensate for flouting their quotas so far. 

Iraq and Nigeria had little choice but to cave, and undertook to deepen their production cuts not just in July but also in August and September, to compensate for their under compliance in May when the deep cuts began. For now, the agreement is to cut a total of 9.7 million bpd until the end of July. According to Russia’s Energy Minister, a further extension of the deep cuts would not be needed as the market will have begun to rebalance by the end of July.

Yet another extension remains a possibility: the latest production data on OPEC, from Petro-Logistics, overall OPEC output was down by 1.25 million bpd in June from May but was still above the amount it was supposed to be producing per its agreement with Russia and the other non-OPEC states in OPEC+

By Charles Kennedy for Oilprice.com

Monday, June 29, 2020

Iran to Reroute Oil Exports from Hormuz Strait: Rouhani


A new 1000-kilometer-long oil pipeline in the south of Iran, the Gorey-Jask pipeline, will provide the country with an alternative route for crude oil exports which are currently transferring through the Strait of Hormuz, the Iranian president said on Tuesday.

Speaking at an event about boosting and promoting domestic production, Hassan Rouhani said the new oil pipeline from the Goreh oilfield to the Port of Jask on Iran’s coast along the Gulf of Oman would reroute the country’s oil exports away from the Hormuz Strait.

Rouhani hailed the project, which has been allocated a $1.8 billion budget, a first in the state’s history.

According to Shana news agency, Iran’s National Oil Company announced that part of the pipeline would come onstream by the end of the current Iranian calendar year to March 19, 2021.

Data from the International Energy Agency showed that Iran’s proven oil reserves were almost 157 billion barrels in 2018 to rank fourth in the world and second globally for natural gas.

Iran’s exports of petroleum products averaged 507,000 barrels per day (bpd) in 2017, falling from 587,000 bpd in 2016.

Iran, which exported 1.8 million barrels of crude oil daily in 2018, was able to export only 573,261 barrels in 2019 due to the US’s withdrawal from the Joint Comprehensive Plan of Action, also known as Iran Nuclear Agreement.

In May 2018, US President Donald Trump unilaterally withdrew from a landmark 2015 nuclear deal that world powers struck with Tehran to curb its nuclear program in exchange for billions of dollars in relief from economic sanctions.

Trump has since embarked on a campaign to scuttle the agreement, including the re-imposition of sanctions on Iranian crude oil that were lifted as part of the agreement.

Friday, June 26, 2020

A day after another Iranian tanker arrives in Venezuela, the US sends another warship to sail along its coast

Navy destroyer Nitze 
US Navy Arleigh Burke-class guided-missile destroyer USS Nitze leaves Safaga, Egypt, after a port visit, July 20, 2019.
US Navy/MCS 3rd Class Will Hardy

  • A US Navy guided-missile destroyer conducted a freedom of navigation operation off of Venezuela on Tuesday, the second such operation this year.
  • The operation comes amid broader tensions between the US and Venezuela, and as US military assets patrol the region and as Iranian tankers continue to arrive in Venezuela.
  • Visit Business Insider's homepage for more stories.
The US military said Tuesday that a Navy guided-missile destroyer sailed along the coast of Venezuela in what the command responsible for the region called a "freedom of navigation operation."

US Southern Command said in a release that the USS Nitze sailed in international waters outside 12-nautical-mile limit on territorial waters and "lawfully navigated an area the illegitimate Maduro regime falsely claims to have control over, a claim that is inconsistent with international law."

Asked about the operation, a spokesman for the command said it was done "to challenge Venezuela's excessive maritime claim of security jurisdiction from 12 to 15 nautical miles along its coastline and prior permission requirement for military operations within the Exclusive Economic Zone, which are contrary to international law."

Exclusive economic zones extend 200 nautical miles from a country's coast, and while that country has rights to economic activities within that zone, ships from other countries can sail through it.

The operation, the second of its kind this year, comes amid heightened tensions between the US and Venezuela.

The Trump administration has applied increasing pressure to the government of President Nicolás Maduro, who the US and dozens of other countries regard as illegitimate. The US has indicted Maduro and members of his inner circle on drug-trafficking charges and sanctioned many in the government, the military, and government assets.

US efforts to isolate Venezuela's oil industry, on which the country is reliant for income but has been undercut by mismanagement, have led Maduro's government to turn to Iran, which has delivered refinery materials as well as gasoline to ease supply shortages in Venezuela.

Several Iranian tankers have already traveled to Venezuela. On Monday, the Iranian-flagged cargo ship Golsan arrived at the port of La Guaira in Venezuela with what Iran's Embassy in Caracas said was food for the country's first Iranian supermarket, according to Reuters.

There was no indication that the Golsan and Nitze encountered each other, but Washington and Tehran have traded threats over the shipments. The US has said it is considering a response to the tankers but has taken no military action, while Iranian officials have said repeatedly they're ready to retaliate if the US acts against tankers heading to Venezuela.

The aid Iran has offered Venezuela, as well as ongoing support from Russia and China, has led to a growing view of Venezuela as a venue for great-power rivalry.

The latest Iranian shipment also comes amid an ongoing US counter-drug operation in the Caribbean and Eastern Pacific Ocean, which began in April and has seen a number of US naval and air assets deployed to the region; US Army advisers have also deployed to neighboring Colombia.

The US Air Force said on Friday that it would temporarily deploy four aircraft — two surveillance aircraft and two aerial refueling tankers — and 200 airmen to Curaçao to fly missions in support of those counter-drug efforts.

The US government and the other mainly Western countries that no longer recognize Maduro have instead recognized Juan Guaidó, an opposition leader and head of Venezuela's national assembly, as interim president.

But Guaidó has struggled to unite the opposition and to counter Maduro. In an interview on Sunday, Trump appeared to wavier in his support for Guaidó and suggested he was open to meeting Maduro. Hours later, Trump walked that back, saying he "would only meet with Maduro to discuss one thing: a peaceful exit from power!"

Thursday, June 25, 2020

Wednesday, June 24, 2020

‘Welcome to the age of copper’: Why the coronavirus pandemic could spark a red metal rally

Factory workers secure large copper tube coils that will be wrapped and shipped out.
Factory workers secure large copper tube coils that will be wrapped and shipped out.
Michael S. Williamson | The Washington Post | Getty Images


The commodity, which is widely seen as a bellwether for the general state of the economy, has taken a hit during the coronavirus crisis.

Slumping demand drove prices down at the height of the pandemic in March. However, benchmark copper on the London Metal Exchange was trading around $5,909 per metric ton Tuesday, up 0.5%. That’s close to its five-month high of $5,928 hit earlier this month, Reuters reported.

The commodity, which is widely seen as a bellwether for the general state of the economy, has taken a hit during the coronavirus crisis.

Slumping demand drove prices down at the height of the pandemic in March. However, benchmark copper on the London Metal Exchange was trading around $5,909 per metric ton Tuesday, up 0.5%. That’s close to its five-month high of $5,928 hit earlier this month, Reuters reported.

Eurasia Group’s Henning Gloystein said in a research note on Tuesday that the pandemic is expected to accelerate trends in government-supported environmental investments and digitalization, which “heralds a coming boom in copper demand.”

“Huge green and digital stimulus programs, especially in Asia and Europe, will create the conditions for a boom in copper demand — electric vehicles, 5G networks, and renewable power generation all require large amounts of the red metal,” Gloystein said.

Demand for copper could fall by as much as 5% in 2020 due to the pandemic-driven recession, he projected. But, widescale fiscal stimulus measures would help drive demand for the metal back to pre-crisis levels next year, he noted, with traders and miners expecting consumption to rebound by 4% in 2021.

Bank of America analysts increased their price forecast for the metal earlier this month, expecting prices to rise 5.4% in 2020 to $5,621 a ton. They kept their projection for 2021 unchanged at $6,250 per ton. The forecasts, they said, were down to “remarkable fiscal stimulus packages” and an expectation that there would be more purchases of raw materials as countries emerged from lockdown.

Analysts at Morgan Stanley also expect the sector to quickly bounce back to pre-pandemic levels, according to Reuters, with global stimulus measures, Chinese infrastructure spending and supply disruptions expected to boost demand.

Green investments

According to Eurasia Group’s note, clean energy and digitalization programs were expected to push average annual growth demand for copper up by 2.5% this decade, which would likely drive consumption toward 30 million tons by 2030.

Policy changes in Asia and Europe would play an important role in the surge in demand, Gloystein said, with shifts in transportation expected to be the “biggest single driver of copper usage.”
“The electric vehicles industry currently makes up just 1% of copper demand. By 2030, many analysts expect that figure to reach 10%,” he said.

China was expected to invest hundreds of billions of dollars in digitalizing its economy over the coming decade, Gloystein noted, while countries all over the world had committed to massive investments in green infrastructure and electric vehicles.

“Copper will be a key input for virtually all the industries that are now being promoted,” he said. “Welcome to the age of copper.”

Political fallout

While Gloystein acknowledged that Southern Hemisphere nations with large copper mining sectors would key beneficiaries from rising copper demand, he noted that China’s influence in the industry could see it gain political leverage in both Australia and South America.

“The rise of the copper economy will have political implications,” he said. “China’s dominant position as a buyer of the raw material will likely give it more political leverage over copper mining regions.”

China is the biggest single user of refined copper in the world, according to Eurasia Group, with the country consuming around 13 million tons of the commodity last year.

Tensions between China and Australia have ramped up in recent years after the latter barred Chinese telecoms giant Huawei from its domestic 5G networks, supporting the U.S. in claims that the company’s presence in the infrastructure posed national security risks.

Relations have been damaged further recently by Australia’s government calling for an investigation into China’s role in the coronavirus outbreak, and by China slapping import tariffs on some Australian goods.

While there is some support among Australian lawmakers to recalibrate exports away from China, Gloystein noted that rising copper demand could limit the country’s ability to achieve this goal.

Meanwhile, Chinese influence would likely rise in Chile – the world’s largest exporter of copper – which is a participant in China’s Belt and Road trade initiative, he added.

“Chile’s sales to China already represent about one-third of total exports,” the note said. “Higher copper sales will likely increase this reliance and expose the country to Beijing’s political pressure in many areas, including in Pacific trade negotiations, the use of Huawei equipment, and relations with the U.S.”

The same, Gloystein warned, was true of Peru, which exports almost twice as many goods to China as it does to Europe or the United States.

Exclusive: Oil tankers carrying two months of Venezuelan output stuck at sea

Venezuela is at the heart of a vast operation to bypass US sanctions as the maritime industry cashes in on the Maduro regime’s desperation, experts claim. (AFP)


MEXICO CITY/SINGAPORE (Reuters) - Tankers carrying nearly two months worth of Venezuelan oil output are stuck at sea as global refiners shun the nation’s crude to avoid falling foul of U.S. sanctions, according to industry sources, PDVSA documents and shipping data. 

Washington is tightening sanctions to cut Venezuela’s oil exports and deprive the government of socialist President Nicolas Maduro of its main source of revenue. 

The OPEC member’s exports are hovering near their lowest levels in more than 70 years and the economy has collapsed, but Maduro has held on - to the frustration of the administration of U.S. President Donald Trump. 

Washington has blacklisted ships and merchants this month for their role in trading and transporting state-run PDVSA’s oil and threatened to add more to its list of sanctioned entities. 

At least 16 tankers carrying 18.1 million barrels of Venezuelan oil are stuck at sea around the globe as buyers shun them to avoid falling foul of sanctions, according to Refinitiv Eikon data. That is the equivalent of almost two months of output at Venezuela’s current production rate. 

Some of the vessels have been at sea for more than six months, and have sailed to several ports but failed to unload. 

Oil cargoes are rarely loaded onto a tanker without a buyer. Those that are on the water with no buyers are generally seen as distressed in the industry, and typically sold at a discount. 

Each tanker is incurring hefty demurrage charges for every day’s delay in unloading. The cost for a vessel transporting Venezuelan oil is at least $30,000 per day, according to a shipping source. 

“This is our third attempt to find a buyer,” said an executive from an oil company registered as PDVSA customer, which took a cargo of Venezuelan heavy crude in January and has been unable to sell it due to the possibility of sanctions. 

The cargo has accumulated demurrage fees in Africa for over 120 days, the executive said, speaking on condition of anonymity.

Even PDVSA’s long-standing customers are struggling to complete transactions that are permitted under sanctions- for debt payment or food swaps, the executive added. Buyers are concerned about sanctions even for those cargoes. 

The Panama-flagged MT Kelly is one of the vessels stuck at sea. It sailed for Turkey in April with no charterer disclosed by PDVSA at its monthly loading schedule. The vessel entered the Mediterranean only to turn around, sail back through the Strait of Gibraltar and steam around the coast of Africa, according to the data. 

PDVSA, Venezuela’s oil ministry and Greece-based Altomare SA, commercial manager of the MT Kelly, did not reply to requests for comment. 

Most of the other tankers set sail for Malaysia, Singapore, Indonesia or Togo, where they typically transfer their oil to other vessels at sea, sometimes disguising their origin before they are shipped to a refiner. The vessels have not discharged, but some have switched off the transponders that broadcast their position, according to the Eikon data. 

Six of the vessels anchored off Malaysia are managed by Greece-based Eurotankers Inc and have been waiting for up to four months to discharge, according to the Eikon data. Eurotankers did not reply to a request for comment. 

Mexico’s Libre Abordo, which along with related firm Schlager Business Group chartered three of the stranded cargoes according to the PDVSA documents, declined to comment. The companies were blacklisted by the U.S. Treasury Department last week along with their owners for trading Venezuelan oil through a pact described by the firms as an oil-for-food agreement. 

Amsterdam-based GPB Global Resources, which chartered two other cargoes, declined to comment on the vessels, but said the company and its subsidiaries “are conducting business in compliance with all applicable rules and regulations, including U.S. sanctions.”

Hong-Kong based Richeart International, in charge of another four shipments, could not be reached for comment. 

The plight of Venezuela’s exports comes as most oil producing nations continue struggling to allocate high inventories in an over-supplied market, which has diminished many buyers’ appetite for risky oil such as Iranian and Venezuelan crude. 

The threat of tighter U.S. sanctions is also disrupting the global shipping market. Since late May, at least six tankers that were sailing toward Venezuela or waiting to load for exports have been diverted as the United States considers blacklisting more vessels and shipping firms over alleged sanction violations. 

Reporting by Marianna Parraga in Mexico City and Roslan Khasawneh in Singapore; additional reporting by Luc Cohen in New York and Ana Isabel Martinez in Mexico City; Editing by Simon Webb and Tom Brown

Tuesday, June 23, 2020

Oil Company Run By Forbes 30-Under-30 Winner Files For Chapter 11 Bankruptcy

Executives from Extraction Oil & Gas at their Denver office. They are left to right Rusty Kelley, CFO, Mark Erickson, chairman and CEO, and Matt Owens president  Denver Post via Getty Images 
Extraction's Matt Owens, right, with cofounder Mark Erickson, in 2014.


Matthew Owens has gleaned a lot of experience at a very young age. He was just 26 years old back in 2012 when he and his former boss at Gasco Energy, Mark Erickson, teamed up with private equity group Yorktown Partners to found what would become Extraction Oil & Gas. 

And Owens was barely 30 when in 2016 Extraction held its IPO — and soon surged to become a $4 billion market cap company. Forbes recognized him in 2016 on our 30 Under 30 list

Since then the young oilman has taken a wild ride on the ups and downs of commodity prices while supervising the drilling and fracking of hundreds of wells in the Wattenberg field in the Colorado’s Denver-Julesburg Basin. 

In March 2020, at 34, Owens took over the CEO reins at Extraction from Erickson — just in time to preside over perhaps his toughest challenge yet: Chapter 11 restructuring.

Extraction yesterday filed for bankruptcy protection. From $4 billion a few years ago, the company’s market cap has fallen to just $78 million. The company’s production volumes, having surpassed 100,000 barrels per day in late 2019, are now down to 90,000 bpd, and falling as Extraction has pulled back on drilling activity amid sadsack oil prices. In 2019 the company recorded a $1.4 billion net loss, due primarily to a write down in the value of oil and gas reserves no longer economic to develop. (BP today announced a $17 billion write down.)

A once-managable debt load has become unwieldy, and a month ago Extraction chose not to make a $15 million interest payment on its roughly $1.5 billion in debt, setting the clock ticking on its bankruptcy filing

Owens continues to accumulate valuable experience. He has already negotiated $125 million of debtor-in-possession financing with primary creditor Wells Fargo WFC , and a debt-for-equity swap that will enable deleveraging. According to Extractions bankruptcy filing: “The Agreement outlines a restructuring plan that will effectuate a significant deleveraging of the Company’s balance sheet through a debt-for-equity swap, pursuant to either a standalone restructuring or a combination transaction, that will leave the Debtors’ unsecured noteholders with the majority of the Company’s equity while still providing a meaningful recovery to junior stakeholders.”

It’s unclear whether there will be any value left for current holders of common stock, led by various Yorktown Partners funds, with about 40%. In keeping with recent bizarre trading patterns in insolvent issues, over the past two weeks Extraction shares have jumped from 28 cents, up to $1.42 a week ago, and are now down to 56 cents. 

Whether Owens survives the restructuring is yet to be seen. A spokesman for Extraction did not reply to an email request this morning. The oil industry is full of second, third and fourth acts (e.g. Floyd Wilson of Halcon, etc). And although investors may ultimately lose money on Extraction, Owens has done well for himself — the company this year announced $6.7 million in retention bonuses for 16 executives. 

In terms of debt load, Extraction now becomes one of the biggest oilpatch bankruptcies so far this year. Other big ones, according to the Haynes & Boone bankruptcy monitors include Whiting Petroleum with $3.6 billion in debt, Ultra Petroleum, also with $3.6 billion, Unit Corp. with $800 million; Southland Royalty $625 million; and Sheridan Holding Company I with $620 million. Among service companies, Diamond Offshore Drilling DO went bankrupt with $2.6 billion in debt, while McDermott International returned to restructuring with $9.9 billion in debt. 

There’s plenty more bankruptcies to come as petroleum prices languish in the $30s. Operators on the deathwatch include California Natural Resources, Callon Petroleum, Chaparral Energy, Denbury Resources DNR , and Chesapeake Energy CHK .

Sunday, June 21, 2020

Exclusive: Mexico freezes bank accounts of entities sanctioned by U.S.



MEXICO CITY (Reuters) - The Mexican government’s financial crime department has frozen the bank accounts of companies and people blacklisted by the United States under accusations of having evaded the sanction regime imposed on Venezuela, its chief said on Friday. 

Santiago Nieto, chief of Mexico’s Financial Intelligence Unit, did not elaborate on details, but told Reuters that bank accounts of “all those listed” by the U.S Treasury’s Office of Foreign Assets Control were frozen. 

Washington on Thursday blacklisted Mexico-based Libre Abordo and related firm Schlager Business Group, accusing them of helping Venezuelan President Nicolas Maduro’s administration evade sanctions, in the first formal action by the U.S. Treasury against Mexican firms involved in trading Venezuelan oil. 

The United States also imposed sanctions on four firms linked to Mexicans Joaquin Leal Jimenez, Veronica Esparza and Olga Zepeda, which it accused of having cooperated with Libre Abordo, Schlager and businessman Alex Saab, arrested last week in Cape Verde, to evade sanctions. 

“Saab and Leal, working with Mexico-based Libre Abordo and Schlager Business Group, brokered the re-sale of over 30 million barrels of crude oil on behalf of (Venezuela’s state-run) PDVSA,” the Treasury said on Thursday.

Nieto said the accounts of Zepeda were among those that were frozen. 

Leal, Esparza and Zepeda could not immediately be reached for comment. 

Libre Abordo told Reuters on Friday it was working on its legal defense before the United States and Mexico. “We are convinced that this action will contribute to ratifying the legality of all our operations.” 

Libre Abordo and Schlager began receiving Venezuelan oil for resale in Asian markets in 2019 after signing an oil-for-food pact with Maduro’s government framed as a humanitarian provision.

While the companies supplied about 500 water trucks to Venezuela, 210,000 tons of corn originally included in the pact were not delivered, Libre Abordo said, adding that very low oil prices modified a schedule agreed by the parties. 

Libre Abordo announced bankruptcy in May after losing $90 million amid what it called “excessive” U.S. pressure. The trade with Venezuela got suspended. 

Reporting by Diego Ore; additional reporting by Ana Isabel Martinez; writing by Marianna Parraga; editing by Leslie Adler

Friday, June 19, 2020

Saudi Arabia’s crown prince uses travel restrictions to consolidate power

The CIA has reportedly said the murder was likely ordered by Crown Prince Mohammed bin Salman, the de facto ruler of Saudi Arabia [File: Reuters]


By David Ignatius / Columnist

The formal term in Arabic is mana’a al-safar, or “travel bans.” But the practical effect of Saudi Crown Prince Mohammed bin Salman’s policy of restricting journeys abroad by what appear to be thousands of Saudis is to intimidate those he regards as political threats.

“This is hostage-taking as a tool of governing,” argued Khalid Aljabri, a Saudi cardiologist who lives in Toronto. Two of his younger siblings, Omar and Sarah, now both in their early 20s, were banned from travel in June 2017 shortly after MBS, as he’s known, became crown prince. MBS wanted leverage against their father, a former Saudi intelligence official named Saad Aljabri, hoping to force him home to face corruption allegations that Khalid says are false.

An investigation shows that this practice of restricting foreign travel is much broader than generally recognized and is part of a larger system of organized repression in the kingdom. MBS has used these tools to consolidate power as he moves toward what some U.S. officials believe may be an attempt, perhaps this year, to seize the full powers of government from his ailing father, King Salman.

The total number of Saudis who are subject to travel restrictions, according to Saudi and U.S. analysts, probably runs into the thousands. Those who are banned don’t usually know about their status until they go to the airport or try to cross a border post, where they’re stopped and told that exit is forbidden on order of the state security organization, which operates through the royal court. No formal, written explanation is typically given. Several members of banned families said they believed the restriction was an effort to pressure or force back to the kingdom those MBS sees as critics or threats.

The Saudis have maintained some restrictions on foreign travel since long before MBS, and they’re hardly the only Middle Eastern country to do so. And in some areas, such as unescorted travel by women, MBS has liberalized the Saudi system. But U.S. and Saudi analysts say he has used control of travel as part of his broader effort to suppress any challenge from within the royal family and the business elite.

The list of banned Saudis starts with the family of the late King Abdullah bin Abdul Aziz, Salman’s predecessor, whose 2015 death set off a “Game of Thrones” rivalry in the kingdom that continues today. According to a knowledgeable Western businessman close to the Abdullah clan, 27 sons and daughters of the late king have been blocked from travel abroad since 2017. In addition, between 52 and 57 grandchildren and eight great-grandchildren have been banned from travel.

The source, who requested anonymity because of the sensitivity of information about the kingdom, wouldn’t identify individual members of the Abdullah clan who have been blocked. According to published news reports, four of Abdullah’s prominent sons — Mutaib, the former head of the national guard; Mishaal, former governor of Mecca; Faisal, former head of the Saudi Red Crescent Society, and Turki, former governor of Riyadh — were all detained and held at the Ritz-Carlton in Riyadh in November 2017 in MBS’s crackdown on alleged corruption. They remain under arrest or house arrest, and their offspring can’t leave the kingdom, Western and Saudi sources said.

Travel bans also apply to the wife and two daughters of Mohammed bin Nayef, the former crown prince whom MBS deposed in June 2017. Mohammed bin Nayef’s wife, Reema bint Sultan, the daughter of former Crown Prince Sultan, was briefly allowed to travel abroad last year for medical treatment, a Saudi and Western source said, but her children Sarah and Lulua are forbidden to leave. Some members of MBS’s own family can’t travel abroad, either, the sources said.

The roughly 300 Saudis who were held at the Ritz-Carlton make up a big portion of the “banned” community. The detainees included some of the kingdom’s most prominent business leaders, such as Prince Alwaleed bin Talal, who has invested in banks and hotels around the world. He and most of the others were released after they were forced to pay a percentage of their financial assets, which MBS claimed had been obtained improperly.

But even these 200 or more who “settled” their cases have been prevented from traveling freely, along with their families, according to various sources.
One source from a banned family estimated that the number of Ritz-Carlton detainees and family members whose travel has been restricted is between 2,000 and 2,500, but this number couldn’t be confirmed. In addition to the Ritz-Carlton cases of alleged corruption, MBS has detained 131 prominent political and religious figures since September 2017, according to a list compiled by Human Rights Watch in November. Their families, too, have been subject to travel bans.

The same report by Human Rights Watch cited these family restrictions as one of the repressive abuses in the kingdom. “In addition to directly targeting Saudi citizens for arrest … in some cases authorities have also punished their family members by imposing arbitrary bans on travel outside the country or freezing their assets and access to services,” the report noted.

An early case that showed how the system works was the Sept. 10, 2017, arrest of cleric Salman Alodh. His brother Khalid immediately tweeted the news, and he was arrested two days later. They both remain in prison, according to human rights monitors. Since then, 17 members of the Alodh family, some under the age of 10, have been prevented from traveling abroad, according Alodh’s son, Abdullah, an adjunct professor at George Washington University. Abdullah was outside the country when his father was jailed and has refused Saudi requests to return home.

“It’s a widespread practice now in Saudi Arabia,” said Abdullah. “They use it to threaten or intimidate or silence a family.”

A classic example of this squeeze technique was the travel ban imposed in 2017 on the son of Post contributor Jamal Khashoggi. When Khashoggi’s oldest son, Salah, was prevented from leaving the kingdom, Khashoggi was told his son would be free to leave if the dissident journalist returned home. Khashoggi, who resisted such intimidation, was murdered in the Saudi Consulate in Istanbul in October 2018, on what the CIA believes were MBS’s orders.

State Department officials have focused on travel-ban cases involving Saudis who have dual U.S. citizenship. One such Saudi American is Walid Fitaihi, a doctor and television personality. He was arrested in November 2017 and freed last August, under U.S. pressure. But he and his family are still banned from traveling abroad. The State Department is pressuring the Saudis on two similar cases involving dual Saudi-U. S. citizens, Salah al-Haidar and Bader al-Ibrahim.
Sometimes, Saudi authorities will allow a member of a prominent family to leave the kingdom, but only if another stays behind as “collateral,” explained one Saudi from a banned family. An example is a billionaire merchant family of three brothers, who expanded from two menswear shops into a network of 19 shopping malls. If one of the brothers leaves, others must remain, a knowledgeable Saudi explained.

Similar restrictions apply to the bin Laden family, who, in addition to their relationship with the late Osama bin Laden, founder of al-Qaeda, run a vast construction business. Two young members of the bin Laden clan were stopped in 2017, one at Jiddah airport, the other trying to cross the causeway into Bahrain.

MBS has defended his pressure on these prominent families as part of an attempt to stop corruption, which for many decades had been an unfortunate fact of life in the kingdom. MBS’s associates say he is preparing corruption charges against Mohammed bin Nayef, alleging that he skimmed intelligence operational funds when he was minister of interior. The Saudis have circulated similar allegations about Saad Aljabri, said his son Khalid. But he said Interpol rejected such charges as politically motivated two years ago.

Holding innocent family members hostage to extort cooperation is a practice characteristic of the most brutal regimes throughout history. Yet as the Saudi machine of repression accelerates, it has sadly become a standard part of MBS’s governance.

Thursday, June 18, 2020

Brazil's Petrobras says it will not hire oil tankers that visited Venezuela

(photo courtesy André Motta de Souza/ Petrobras).


RIO DE JANEIRO (Reuters) - Brazil’s Petroleo Brasileiro SA has told shippers it will not hire any tankers that have visited Venezuela in the past 12 months, the state-controlled oil company said on Friday, signaling adherence to U.S. sanctions on the Latin American nation.

The United States this year blacklisted oil tankers and shipping companies over their dealings with Venezuela, seeking to drain oil revenues that sustain the rule of Venezuelan President Nicolas Maduro. Washington has said it could add to its sanctions list, a move that could disrupt sea-borne trade by sharply raising tanker rates.

“We have recently reinforced to our suppliers we would not accept offers from ships that had operated in Venezuela during the sanctions period (12 months),” the company said in an emailed response to Reuters. 

Petrobras has added specific language to its shipping contracts to avoid hiring ships out of compliance with U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) regulations, the Petrobras statement said. 

Under President Jair Bolsonaro, who describes himself as an admirer of U.S. President Donald Trump, Brazil and its state-controlled oil producer have distanced themselves from Venezuela.
Reporting by Sabrina Valle; Editing by Will Dunham

Iran prepared to retaliate if U.S. stopped Venezuela-bound tankers: news agency

The Iranian tanker ship "Fortune" is seen at El Palito refinery dock in Puerto Cabello


DUBAI (Reuters) - An Iranian news agency close to the elite Revolutionary Guards said on Saturday Iran's naval forces were preparing to target U.S. commercial vessels in the Gulf last month in case U.S. forces interfered with Venezuela-bound Iranian oil tankers.

Iran sent a flotilla of five tankers of fuel to gasoline-starved ally Venezuela in May, and Tehran has said it will continue the shipments if Caracas requests more, despite Washington's criticism of the trade between the two nations, which are both under U.S. sanctions.

"According to reports received by Noor News, after increasing military threats against Iranian vessels headed for Venezuela, an order was issued to Iran's armed forces to identify and track several U.S. merchant vessels in the Persian Gulf and the Gulf of Oman," Noor News said on its website.

"Options for reciprocal action were immediately identified and monitored for possible operations," the agency added.

Iran complained to the United Nations last month and summoned the Swiss ambassador in Tehran, who represents U.S. interests in the Islamic Republic, over possible measures Washington could take against the Iranian tankers.

The United States, which did not hinder Iran's tanker cargoes, is considering imposing sanctions on dozens of additional foreign oil tankers for trading with Venezuela, a U.S. official told Reuters earlier this month.

Iran seized a British-flagged tanker in the Gulf last yearafter British forces detained an Iranian tanker off theterritory of Gibraltar. Both vessels were released after amonths-long standoff.

In an alert that appeared aimed squarely at Iran, the U.S. Navy issued a warning last month to mariners in the Gulf to stay 100 meters (yards) away from U.S. warships or risk being "interpreted as a threat and subject to lawful defensive measures".

Tension between Washington and Tehran has escalated since 2018, when U.S. President Donald Trump withdrew from Iran's 2015 nuclear deal with six world powers and reimposed crippling sanctions targeting particularly its vital oil industry.

Tuesday, June 16, 2020

How negative oil prices revealed the dangers of the futures market

trading floor 

  • A historic drop occurred on April 20, when the price of West Texas Intermediate crude dropped by almost 300%, trading at around negative $37 per barrel. 
  • The crash in demand that followed the spread of Covid-19, along with a price war between oil giants Saudi Arabia and Russia in early March spurred the move into negative prices. 
  • As the delivery date for WTI grew near, investors began a massive sell-off to take the contract off their hands.
  • The price of oil has steadily recovered, jumping nearly 90% in May and registering the best month on record for WTI.
A historic drop occurred on April 20,  when the price of West Texas Intermediate crude dropped by almost 300%, trading at around negative $37 per barrel. 

The price of oil has steadily recovered, jumping by nearly 90% in May and registered the best month on record for WTI. However, the petroleum industry is still reeling from the effects of the coronavirus pandemic. Major companies like Chevron, Exxon and ConocoPhillips have announced deep production cuts and Whiting Petroleum in April became the first major company in the industry to file for bankruptcy protection.

The crash in demand for oil that followed the pandemic played a major role in the move to negative prices. “At the trough, we probably saw demand in April bottom out down 30%. So we’ve never seen anything like this certainly in the last 40 years since world oil markets have developed,” said Severin Borenstein, a professor of business at the University of California, Berkeley.

To make matters worse, a price war erupted between oil giants Saudi Arabia and Russia in early March after OPEC and its allies failed to reach an agreement on deeper supply cuts. As supply remained steady while demand struck record-breaking lows, the industry quickly began running out of storage space to put their oil. This was devastating news for investors of WTI futures who are expected to take physical possession of the oil when the contract expires.

“WTI is special in a way because it’s so tightly connected to physical oil,” said Derrick Morgan, senior vice president of American Fuel & Petrochemical Manufacturers. 

As the delivery date for WTI grew near, investors began a massive sell-off to take the contract off their hands, prompting an unprecedented crash into the negative territory.

The historic drop quickly sent shock waves through the U.S. financial market. The Dow plunged by over 1,200 points over the following two days and brokerage firms took multimillion-dollar hits to cover customers’ losses. However, experts point out that although the event was unprecedented, there was no need to panic. “There were very few contracts. There was very little trading at those prices and the price very quickly rebounded into positive territory,” according to Borenstein.

Monday, June 15, 2020

Texas Oil-Export Terminals Start Up Even as Shipments Tumble

Buckeye Partners LP operates this tank farm on Buckeye Road in Lower Macungie Township. 
  Buckeye Partners LP operates this tank farm on Buckeye Road in Lower Macungie Township. (THE MORNING CALL FILE PHOTO)

Yet another Texas terminal is preparing to export oil, even as the pandemic continues to hammer global demand for U.S. crude.

Buckeye Partners LP expects to start loading ships with oil for export in the second half of July, after receiving crude at its South Texas Gateway terminal in the Port of Corpus Christi about a month earlier than planned. At least 15 other terminals have started exporting U.S. crude in recent years, encouraged by record shale production and growing demand for barrels in Asia. In April, Mercuria Energy Group-backed Pin Oak Terminals became one of the latest to start exports at its Corpus Christi terminal.

The projects come at a tough time for the oil industry, which has been upended by the coronavirus pandemic. As the virus wreaks havoc on global markets, American oil exports have tumbled from a record high of 3.7 million barrels a day in February to around 3 million barrels in April. Shipments were around 2.4 million barrels a day during the first week of June.

The launch of the Buckeye and Pin Oak terminals at a time like this signals that exporters believe demand will eventually recover, said Pin Oak Chief Executive Corey Leonard. While both projects were under development years before the current health emergency — with shippers, contracts and finance already lined up — they could have deferred their commission by a month or two if market conditions called for it. Instead, they’re pushing ahead.

“If our customers were communicating an inability to source barrels or deliver barrels at the time of commissioning because of the pandemic, additional pathways would have been explored to support both our customers and our facilities for that short period of time,” he said.

Since Pin Oak’s first tanker loading, activity has been brisk, he said, with barrels heading to various destinations including the U.S. Virgin Islands for re-export to China.

Still, the post-virus outlook for petroleum consumption isn’t exactly rosy. An expected global recession could weigh on demand through 2022 at least, according to industry experts. A return to record domestic crude production, which had underpinned the surge in U.S. oil exports, will also be difficult with prices still hovering below $40 a barrel.

One option for terminals if shipments continue decline is loading vessels to operate as floating storage until demand perks up again. The practice is becoming more common, with nearly 185 million barrels of crude aboard floating storage for the week ending June 5, up over 16 million from the week prior, according to data from Vortexa Ltd., a data analytics firm.

Friday, June 12, 2020

Special Report: How China got shipments of Venezuelan oil despite U.S. sanctions

FILE PHOTO: Supporters of Venezuela's President Nicolas Maduro hold anti-trump banners during a rally against the U.S. sanctions on Venezuela, in Caracas. Photo: Reuters

FILE PHOTO: Supporters of Venezuela's President Nicolas Maduro hold anti-trump banners during a rally against the U.S. sanctions on Venezuela, in Caracas. Photo: Reuters
Read more at https://www.todayonline.com/world/special-report-vast-amounts-venezuelan-oil-are-hidden-en-route-china-bypassing-us-sanctions-1


CARACAS/MEXICO CITY (Reuters) - Last year, China replaced the United States as the No. 1 importer of oil from Venezuela, yet another front in the heated rivalry between Washington and Beijing. 

The United States had imposed sanctions on Venezuela’s state-owned oil company as part of a bid to topple that country’s socialist president, Nicolas Maduro. U.S. refineries stopped buying Venezuelan crude. Caracas’ ally China, long a major customer, suddenly found itself the top purchaser. Through the first six months of 2019, it imported an average of 350,000 barrels per day of crude from Venezuela.
But in August, Washington tightened its sanctions on Venezuela, warning that any foreign entity that continued to do business with the South American country’s government could find itself subject to sanctions. State-owned China National Petroleum Corp, known as CNPC, stopped loading oil at Venezuelan ports that month. China’s import data showed purchases started to slow, and by late 2019, abruptly stopped. 

China’s largest oil company, like customers in some other countries, seemed to be knuckling under to U.S. President Donald Trump’s threats, despite Chinese President Xi Jinping’s professed support for Maduro. 

But China never stopped buying. Crude from Petroleos de Venezuela SA, or PDVSA, kept arriving at Chinese ports with the help of a Switzerland-based unit of Rosneft, Russia’s state-owned oil company, and a roundabout delivery method that made it appear as if the oil’s origin was Malaysia, Reuters has found.  

Between July 1 and Dec. 31, tanker ships delivered at least 18 shipments totaling 19.7 million barrels of rebranded Venezuelan crude to Chinese ports, Reuters determined. That finding is based on a review of ship-tracking data, internal PDVSA documents and interviews with four petroleum analysts who have tracked flows of Venezuelan oil around the globe. 

A unit of CNPC chartered at least one of those tankers, meaning it was responsible for the oil aboard, the ship-tracking data show. That vessel, called the Adventure, took on Venezuelan crude on July 18 and discharged it in China on Sept. 4, the data show. No charter information was available for the other ships that offloaded crude in China. 

CNPC did not respond to requests for comment. 

Those 18 shipments represented more than 5% of Venezuela’s total exports in 2019, worth around $1 billion at market prices for the country’s flagship crude grade, known as Merey, based on OPEC figures. The sales provided much-needed support to Maduro’s government, though Reuters could not determine how much was added to state coffers; PDVSA often sells its crude at steep discounts, and some of its sales go to pay down debt rather than generate cash. 

The mislabeled shipments have continued into this year, Reuters found. The review used data available on financial information provider Refinitiv Eikon, photos culled from satellite imagery and Automatic Identification System (AIS) data transmitted by oil tankers. New York-based Refinitiv is part-owned by Reuters’ parent company, Thomson Reuters. 

The shipping method - involving the transfer of oil between tanker ships at sea – has for months been under scrutiny by the Trump administration. Washington in February slapped sanctions on Rosneft Trading SA, the Geneva-based subsidiary of Rosneft (ROSN.MM), which it alleges was helping Venezuela to export its oil using so-called ship-to-ship (STS) transfers to mask the true origin of the crude. Rosneft denied wrongdoing.
“The Company has always been conducting and is conducting its business in full compliance with applicable international legislation,” Rosneft said in a June 5 statement in response to questions for this article. 

Russia’s energy ministry did not reply to a request for comment. 

China’s indirect imports of Venezuelan crude fall into something of a gray zone, according to Peter Harrell, a sanctions expert at the Center for a New American Security think tank in Washington. 

Harrell believes U.S. sanctions give Washington authority to punish foreign companies that purchase PDVSA oil through a middleman - particularly if the company “knows or should have known it was Venezuelan crude.” But that does not obligate the U.S. government to act. 

“At the end of the day, these sanctions are fundamentally policy calls,” Harrell said. 

Reuters could not independently verify if China knew the oil that reached its shores via Rosneft Trading came from Venezuela. 

The U.S. Treasury Department, which enforces trade sanctions, declined to comment.

Asked about the Reuters findings, Elliott Abrams, the U.S. State Department’s special representative for Venezuela, said in an interview that potential U.S. sanctions against Chinese companies purchasing transshipped crude were “on the table.”  

“We will be taking individual actions with respect to STS transfers,” Abrams said. 

China’s General Administration of Customs did not respond to requests for comment. The Foreign Ministry told Reuters there was nothing improper about China’s dealings with Venezuela. The ministry said U.S. sanctions had “severely affected” relations between Venezuela and the rest of the world, but said Beijing intends to continue trading with the country. 

Neither PDVSA, Venezuela’s Oil Ministry, nor the Information Ministry - which responds to media inquiries on the government’s behalf - responded to requests for comment. Venezuelan officials have repeatedly described U.S. sanctions on their country as illegal and unilateral. 

Oil analysts since last year have said Venezuelan oil was making its way to China by way of STS transfers. This account is the first to reveal the extent of those shipments and demonstrate how systematic the tactic has been. Reuters also reviewed internal PDVSA documents that showed the Rosneft unit was involved in moving the oil. 

So much PDVSA oil was shipped to China this way that the country’s total 2019 imports of Venezuelan oil averaged 283,000 barrels a day. That’s 24% higher than the 228,700 barrels a day reported by Chinese customs, according to Reuters calculations based on comparisons of the Refinitiv Eikon data to official Chinese customs data. 

That was not enough to offset entirely the impact that U.S. sanctions had on PDVSA; U.S. refiners were importing an average of 500,000 barrels per day when the sanctions were imposed in January 2019. But it helped Venezuela keep its oil industry alive at a time when the drop in demand from foreign buyers was creating a glut onshore, nearly forcing PDVSA to halt production in key oil fields.
The STS maneuvers mirror tactics that Iran, whose oil industry is also under U.S. sanctions, has used to ship its oil to China for years. As Reuters documented in reports in 2019 and 2015, Iranian oil often is labeled as coming from neighboring Iraq. 

A representative of the operator of a Chinese terminal where one such shipment unloaded in 2019 denied that the origin of the oil was Iranian. 

Alireza Miryousefi, spokesman for Iran’s mission to the United Nations in New York, said in a statement “how we sell or export our oil is no one’s business.” He said U.S. sanctions on Iran’s oil exports are “illegal.” 

The Chinese shipments of Venezuelan crude were unusual for a variety of reasons, oil analysts said. 

STS transfers typically are used for legitimate purposes - such as offloading oil from deep-water drilling ships or pumping oil from large tankers onto smaller vessels that can navigate narrow or shallow waterways. The use of this technique to transport oil from Venezuela to China was not seen until the middle of last year, the oil analysts said. 

Tankers leaving Venezuela loaded with PDVSA crude did not travel straight to China as they had in the past. Instead, 15 tankers whose routes were reviewed by Reuters left Venezuela and first headed for the coast of Malaysia, tracking data show. A few miles offshore, in the Malacca Strait, each rendezvoused with a second, empty tanker that had pulled alongside.  

The full tanker then pumped its load into the waiting vessel, and in some cases into multiple smaller vessels. Eighteen of those receiving ships then headed to China, where the Venezuelan crude was offloaded and recorded as a product of Malaysia, Chinese customs records show. 

Reuters could not ascertain who changed the crude’s labeled origin before it reached Chinese customs, nor whether doing so expressly violated any maritime laws or local laws in any applicable jurisdictions. 

Michelle Bockmann, markets editor and analyst at Lloyd’s List, a shipping trade publication, said the relabeling was highly uncommon. With the exception of Iran, Bockmann said she could not recall any other instance of crude changing identities in this way. 

The imports were a break from China’s past practice. China routinely has imported oil from countries such as Brazil and Russia using STS transfers. But Chinese customs accurately recorded the true countries of origin in those cases, according to Chinese customs data and Emma Li, a Singapore-based oil analyst with Refinitiv. 

In addition, Malaysia is a mid-sized oil producer that has not traditionally sold crude to China in the volumes recorded by Chinese customs last year, the records show. China’s stated 2019 imports from Malaysia were 400% higher than levels recorded just three years earlier, and the highest ever recorded by Refinitiv Eikon, whose figures date to 2006.

The Malaysia External Trade Development Corporation, the government agency largely in charge of foreign trade, did not respond to requests for comment, nor did Malaysia’s state-owned oil company Petronas. 

This triangulated trade in Venezuelan oil is now in the crosshairs of the Trump administration. 

The company that lifted the oil from Venezuela for the China shipments identified by Reuters was Rosneft Trading, according to internal PDVSA documents reviewed by Reuters. Until late March, it was a major player in Venezuela’s oil industry. The U.S. Treasury on Feb. 18 hit Rosneft Trading with sanctions for allegedly helping Venezuela sidestep the U.S. pressure campaign and sell its oil abroad. 

Among the tactics employed by Rosneft Trading were STS transfers, U.S. officials allege. By using one ship to haul crude out of Venezuela, then a second to deliver it to China, Rosneft Trading attempted to blur the chain of ownership and disguise the oil’s provenance, Abrams, the State Department’s special representative for Venezuela, told Reuters, without providing further proof of Rosneft’s intentions. 

“The whole purpose is to evade, the whole purpose is to mislead,” Abrams said. 

On March 28, Rosneft announced it was ending its Venezuela operations and selling all its assets in the country to another, unnamed Russian state-owned firm. 

“Rosneft has no ongoing business involvement, assets or operations in Venezuela; therefore, there is no subject for providing further comments,” the company said in its June 5 statement to Reuters. 

The Trump administration, meanwhile, gave Rosneft Trading customers until May 20 to unwind their contracts with the company or face U.S. sanctions. Asked whether Chinese customers were involved in hiding the Venezuelan origin of the crude, Abrams said that Asian clients often did not care “how it gets to them, what it’s labeled, as long as they’re getting what they bought.” 

China’s Foreign Ministry said in a statement it was not aware of the STS transfers in question. 

“The cooperation between China and Venezuela will be carried out normally no matter how the situation changes,” the statement read. “It’s legitimate and benefits the people of both countries and will not be affected by any unilateral sanction measures.” 

Reuters could not ascertain the final customers for the PDVSA crude in China. But Venezuela’s heavy Merey blend is a favored feedstock for refineries making asphalt in China, according to industry sources there. 

One of the earliest STS transfers involved the Adventure, a tanker chartered by a CNPC subsidiary. On July 18, it took on 1.9 million barrels of Venezuelan crude from another vessel in Malaysian waters, then headed for China, Refinitiv Eikon data show. 

The manager of the Adventure, Greece-based Eastern Mediterranean Maritime Ltd, said it had never entered into any agreement with PDVSA or any company sanctioned by the United States, and that it “respects and complies in full” with U.S. sanctions. The maritime company said the cargo’s bill of lading and certificate of origin said the oil had come from Malaysia. 


Malaysia is a popular location for STS transfers of crude because of its proximity to Singapore, one of the world’s largest oil trading and storage hubs. One of the STS transfers reviewed by Reuters occurred near Malaysia’s port of Kuala Linggi; the rest took place outside the country’s Tanjung Bruas port. 

To demonstrate how these STS transfers work, Reuters used records available on Refinitiv Eikon to reconstruct a shipment to China of 2 million barrels that left the Jose terminal in northeastern Venezuela on Aug. 5, 2019.  

The oil was carried aboard a Liberia-flagged vessel called the Delta Aigaion, according to Refinitiv Eikon data and an internal PDVSA document seen by Reuters. The crude was a heavy blend known as Merey 16, which is unique to Venezuela, and the customer was listed as Rosneft Trading, the PDVSA document shows.  

The Delta Aigaion sailed to waters off Malaysia near the port of Tanjung Bruas. There, the crew used a STS transfer to offload the Merey 16 to another tanker, the Malta-flagged Lipari, on Oct. 28, according to Refinitiv Eikon data. The Lipari then headed for China, discharging its crude on Dec. 12 at the port of Zhanjiang, the data show.

Refinitiv Eikon ship-tracking data shows the location of ships and indicates how full they are. In this case, the data showed that the draft of each ship changed dramatically while the two were in the same location off Malaysia’s coast at the same time. The draft is the vertical distance between the waterline and the bottom of a vessel’s hull - a sign of how heavy a load it is carrying. The draft measurements showed that the Delta Aigaion arrived in Malaysia full and left empty, while the opposite was true for the Lipari - an indication that an oil transfer between the two took place.

In a photo taken using a European Space Agency radar satellite and provided to Reuters by San Francisco-based earth imaging company Planet Labs, the Delta Aigaion and the Lipari can be seen approaching one another to start the oil transfer on Oct 28. The authenticity of that photo was verified by oil industry data provider TankerTrackers.com, which specializes in satellite image analysis for vessel tracking. 

Refinitiv Eikon retrieves location information from satellite images as well as from land-based sensors that collect data from ships’ transponders. Ships are required by international maritime law to carry transponders to transmit information about their position, speed and destination. The U.S. government has accused tankers and shipping firms transporting oil from Venezuela and Iran of manipulating this data to evade authorities, either by flashing false destinations or simply turning off their transponders.  

The Delta Aigaion, while on its way to Venezuela in July after leaving its previous berthing in India, never indicated it was heading to the South American country, Refinitiv Eikon data show. The tanker listed its destination as “For Orders,” a message meaning it had not yet received instructions on where to go next. 

Delta Tankers Ltd and TMS Tankers Ltd, the shipping companies that manage the Delta Aigaion and Lipari, respectively, did not respond to requests for comment. MMC Corp Bhd and T.A.G. Marine Sdn Bhd, which operate the Tanjung Bruas and Kuala Linggi ports, respectively, did not respond to requests for comment.  

When the Lipari unloaded in the southwestern Chinese city of Zhanjiang, Chinese customs labeled the crude as “Singma blend,” a grade of crude that did not exist in the market before last year. Customs recorded the country of origin as Malaysia. 

Li, the Refinitiv analyst, said the labeling of the crude as a blend appears to be incorrect. If the crude were a blend of different grades - a practice common in the oil industry - the STS operation would have involved multiple vessels bringing crude from separate origins, Li said. Ship-tracking data show no indication that this occurred. “It doesn’t look like there’s any blending,” Li said. 

For 14 of the 18 tankers reviewed by Reuters, the grade of crude recorded by Chinese customs was Singma or Mal, another blend that did not exist before last year, data compiled by Li show. In other cases, the Venezuelan crude was given the names of more established Malaysian grades such as Miri or Kimanis, or was not specified, according to the data compiled by Li. Merey 16, the Venezuelan blend, was not mentioned.


The arrival of Venezuelan oil in China via STS transfers continued through at least the first two months of 2020. During January and February, Chinese customs once again reported no imports of Venezuelan crude. However, nearly 130,000 barrels per day of PDVSA oil arrived at Chinese ports in those two months from seven tankers that had done STS operations, according to the Reuters review. 

With U.S. pressure on Venezuela rising, it is unclear whether the tactics PDVSA and its partners employed over the past year to export Venezuelan oil will remain viable.  

Even before it announced its complete withdrawal from Venezuela on March 28, Rosneft had not lifted any crude from the country’s ports for around a month. Meanwhile, global oil prices have plunged in recent months due to a collapse in demand resulting from the spread of the novel coronavirus. Venezuela’s crude output has dropped by more than 20% this year to below 700,000 barrels per day.  

Still, there are signs the discreet trade will continue. 

With few established oil companies willing to buy oil directly from Venezuela over fears of provoking Trump, two little-known Mexican firms - Libre Abordo and Schlager Business Group - recently emerged as the largest intermediaries for PDVSA crude. The companies told Reuters they had a deal with Maduro’s government to supply goods, including corn and water trucks, in exchange for the oil, which they then resell.  

The U.S. Federal Bureau of Investigation has been investigating the two companies, among others, as part of an inquiry into possible violations of U.S. sanctions on PDVSA, according to three people familiar with the matter. 

The Mexican firms said swaps of goods for Venezuelan oil were permitted under U.S. sanctions as long as no cash payments reached Maduro’s government. The companies said they have no knowledge of any U.S. investigation into their practices. 

On Feb. 11, a Panama-flagged tanker named the Athens Voyager loaded some 700,000 barrels of crude near western Venezuela’s Amuay oil port, according to Refinitiv Eikon data. Its customer was Libre Abordo, according to an internal PDVSA document viewed by Reuters. 

On Sunday, April 5, the fully loaded Athens Voyager arrived at its destination: the Linggi STS hub off the coast of Malaysia. There it pumped its cargo onto a Liberia-flagged vessel named the Loyalty A on April 17. 

The manager of the Athens Voyager, Greece-based Chemnav Shipmanagement Ltd, deferred comment to the vessel’s owner, Marshall Islands-based Afranav Maritime Ltd. The manager of the Loyalty A, Jacinta Marine Corp of Lagos, Nigeria, did not respond to a request for comment.

On June 2, the U.S. Treasury Department announced sanctions against Afranav Shipmanagement for its alleged role in trading Venezuelan oil. It said the Athens Voyager had lifted oil from Venezuelan ports as recently as mid-February. 

Afranav did not respond to requests for comment. 

Libre Abordo, meanwhile, declared bankruptcy on May 31. It said its arrangement with Venezuela had been suspended by Maduro, and that it was the target of an international pressure campaign driven by Washington.  

In a June 8 email to Reuters, Libre Abordo confirmed that the oil transported aboard the Athens Voyager was registered in its name. On June 10, Libre Abordo said further that the documentation of origin reflected that the crude came from Venezuela. The company said it sent the oil to Malaysia, where it was offloaded to another ship at the behest of the final customer, whose name it would not disclose. 

According to Refinitiv Eikon data, the receiving vessel, the Loyalty A, is currently en route to Qingdao, China.  

Reporting by Luc Cohen in Caracas and Marianna Parraga in Mexico City; Additional reporting by Humeyra Pamuk in Washington, Ana Isabel Martinez in Mexico City, Aizhu Chen in Singapore, Muyu Xu in Beijing, Joseph Sipalan in Kuala Lumpur, Michelle Nichols in New York, and Jonathan Saul in London; Editing by Marla Dickerson