CNPC Backs Out Of Oil Purchases With Venezuela On Sanctions Scare

(Oilprice.com, Julianne Geiger, 16.Aug.2019) — Russia and China have stuck with Venezuela during its most recent time of need, but at least one of their loyalties may soon come to an end, according to anonymous sources who spoke to Bloomberg on Friday.

CPNC’s PetroChina has canceled loading plans in August that would have seen 5 million barrels of Venezuelan oil, the sources said, as the United States continues to squeeze Venezuela to loosen Nicolas Maduro’s hold on the troubled Latin American Country.

Maduro has precious few allies left, and until recently, China has been a devoted one. China was one of PDVSA’s top buyers of crude oil, even after the initial rounds of sanctions took hold. But now things are changing, and the most recent screw-turning by the Trump administration has foreign oil companies doing business with PDVSA on edge. The new sanctions target companies—even foreign ones—doing business with PDVSA, threatening to seize their assets in the United States if they have any.

Without China’s backing and loans, Venezuela is left without many options. China has loaned Venezuela $50 billion over the past decade, Bloomberg reports, and has purchased 339,000 barrels per day of Venezuela’s crude.

It’s unclear exactly how painful Venezuela will find this—Venezuela’s oil production is already falling, according to today’s OPEC Monthly Oil Market Report which shows that oil production fell 32,000 bpd in July, reaching 742,000 bpd.

PetroChina’s cancellations are the first of its kind in more than a decade, but its distancing from Venezuela follows another similar action in January this year when PetroChina announced it was dropping PDVSA as a partner in a $10 billion oil refinery project in southern China, according to Reuters. It was thought at the time that this was more due to PDVSA’s financial unattractiveness rather than sanctions levied by the United States.

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