May 4, 2020.- While OPEC begins to scale back oil production to offset at least partially some of the world’s excess oil supply, Venezuela was busy ramping up its oil exports—even in the face of US sanctions and Rosneft pulling the plug on its dealings with PDVSA but keeping its business ties with President Maduro’s government.
After the United States sanctioned two Rosneft subsidiaries for propping up the Maduro regime by reselling oil and oil products from Venezuela to other markets including Asia, Rosneft pulled back, sending Venezuela’s March oil exports to lows not seen since mid-2019.
But in April, its exports recovered, Reuters said on Monday, as it found new shippers and resellers for its oil cargoes, including Mexico’s Libre Abordo and Schlager Business Group who have engaged in an oil-for-corn-and-water pact with Venezuela.
The Mexico companies are adamant that its dealings with Venezuela are strictly humanitarian in nature and that they did not violate U.S. sanctions. Secretary of State Mike Pompeo, however, announced last week that both the U.S. Embassy and Mexico are investing the matter on suspicion that they might be serving as shell companies for the purposes of skirting U.S. sanctions, according to Reuters.
Venezuela exported roughly nearly 850,000 bpd of crude oil and refined products in April—nearly 35,000 bpd more than in March.
The top destinations for Venezuela’s crude and crude products exports are China and India, although they are mainly end-users, and typically use intermediaries like Rosneft and the new Mexico companies to get the oil that would otherwise fall under the strict U.S. sanctions.
Despite finding two new middle men to replace a nervous Rosneft, Venezuela’s oil inventories are still high at roughly 30 million barrels as the U.S. sanctions have restricted buyers of PDVSA’s oil to a small few.