China CNPC suspends Venezuelan oil loading, worried about U.S. sanctions: sources
20 Aug 2019

China National Petroleum Corp, a leading buyer of Venezuelan oil, has halted August loadings following the latest U.S. sanctions on the South American exporter, three sources with direct knowledge of the matter told Reuters on Monday.

The Trump administration in early August froze all Venezuelan government assets in the United States and U.S. officials ratcheted up threats against companies that do business with Venezuela’s state-run oil company, Petróleos de Venezuela, S.A., or PDVSA.

“Trump’s executive order gave a directive for the follow-up sanction measures that shall be announced by the U.S. Treasury… CNPC is worried that the company is likely to be hit by the secondary sanctions,” said one source.

A CNPC spokesman declined to comment. PDVSA and Venezuela’s information ministry did not immediately respond to requests for comment.

A second person, an executive with a large marketer of Venezuelan oil in China, said his company had been notified of the suspension.

“We were told that Chinaoil will not load any oil in August. We don’t know what will happen after,” he said.

Chinaoil is the trading vehicle of CNPC that buys most Venezuelan crude under term contracts and is one of Caracas’ top clients. PetroChina, another of CNPC’s subsidiaries, also is a direct buyer of Venezuelan oil. Both were struggling to charter vessels willing to load at the OPEC-member nation’s ports due to sanctions, according to traders.

The suspension caught PDVSA by surprise, according to one of the sources, but it could be temporary if CNPC is able to put in place a new arrangement excluding units involved in businesses with the United States. A new deal has not yet been reached, two separate sources with knowledge of the decision said.

The sources declined to be identified as they are not authorized to speak to the media.

Most deliveries of Venezuelan oil and refined products to CNPC’s units are intended to monetize billions of dollars lent by China to Venezuela through oil-for-loan pacts. PDVSA has never failed to deliver crude to China to pay off debts, although refinancing and grace periods have been agreed upon over the last decade to ease the debt burden.

By Chen Aizhu and Marianna Parraga, Reuters, 19 August 2019

Read more at Reuters

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