(Reuters, Chen Aizhu, 10.Sep.2019) — China National Petroleum Corp (CNPC), a leading buyer of Venezuelan oil, will skip cargo loadings for a second month in September as the state oil giant looks to avoid breaching U.S. sanctions, two sources with knowledge of the matter said.
CNPC made a surprise halt last month in loading Venezuelan oil after the Trump administration in early August froze Venezuelan government assets in the U.S. and officials warned companies against dealing with Venezuela’s state-run oil company, Petróleos de Venezuela, S.A., or PDVSA.
“CNPC at the group level has made it clear not to load Venezuelan oil,” said one source with direct knowledge of CNPC’s position on Monday, without giving a timeline on how long the suspension would last.
A separate senior Chinese industry source said last month that CNPC interpreted the Trump administration’s executive order as a potential prelude for more extensive sanction measures that could potentially hit CNPC as a leading oil client of Caracas.
CNPC declined comment.
The move comes as Russian state oil major Rosneft has become the main trader of Venezuelan crude, shipping oil to other buyers and helping Caracas offset the loss of traditional dealers who are avoiding it for fear of breaching U.S. sanctions, Reuters reported last month.
A PDVSA crude oil loading program seen by Reuters confirms that so far no CNPC cargoes are planned for this month.
PDVSA did not respond to a request for comment.
The executive order Trump issued on Aug. 5 did not explicitly sanction non-U.S. companies that do business with PDVSA, including partners in crude operations like France’s Total SA, as well as Russian and Chinese customers.
However, the order threatens to freeze U.S. assets of any person or company determined to have “materially assisted” the Venezuelan government.
Other Chinese crude oil buyers have also been warned off from making Venezuelan purchases at a recent meeting between the National Development & Reform Commission (NDRC), China’s state planner, and about six independent refineries, according to a source who was briefed on the meeting.
“At the meeting NDRC told these plants, which process (Venezuelan crude) Merey to make bitumen, that there will not be supplies from CNPC and that they should look for replacements to maintain production,” said the source.
The two sources declined to be named due to the sensitive nature of the matter.
NDRC did not immediately respond to a request for comment.
Most deliveries of Venezuelan crude oil and refined products to CNPC are to repay billions of dollars Beijing lent to Caracas through oil-for-loan pacts. PDVSA has never failed to deliver crude oil to China to repay debts, although refinancing and grace periods have been agreed over the last decade to ease the debt burden.
Chinese customs data showed China’s Venezuelan crude imports plunged 40% in July to just over 700,000 tonnes, the lowest monthly amount in nearly five years.
Reporting by Chen Aizhu; Additional reporting by Marianna Parraga in Mexico City; editing by Richard Pullin