Vast amounts of Venezuelan oil hidden en route to China, bypassing U.S.

CARACAS/MEXICO CITY – 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 as 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. 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 percent 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 it could not be determined 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.