Saudi Arabia’s tanker owner Bahri has dismissed reports that one of its very large crude carriers (VLCCs) was breaching U.S. sanctions on Venezuela.
Namely, the company’s 303,000 dwt oil tanker Abqaiq is on its way from the Red Sea to pick up a cargo from the Port of Jose Terminal in Venezuela for one of its Indian customers.
Bahri explained that the cargo was contracted on January 9, 2019, before the U.S. sanctions were imposed against Venezuela on January 28, 2019. The company added that the Abqaiq voyage is expected to be completed before the end of the exemption period allowed to wind-down agreements.
“Venezuela is a frequent loading destination for Bahri’s oil tankers, delivering cargoes to ports in India and China. Hence, the recent voyage to the Port of Jose is not an exceptional or peculiar one, as lately stated by a media outlet,” Bahri concluded.
The company’s explanation comes on the back of a report by S&P Global Platts suggesting that the VLCC Abqaiq may be in violation of the sanctions.
The U.S. sanctions on Venezuela left more than 20 tankers, loaded with 9.6 million barrels of Venezuelan oil, stranded off the U.S. Gulf Coast in the initial ten days following their implementation, according to Reuters.
Venezuela’s crude exports dropped to 1.275 million barrels per day (bpd) in January, from 1.37 million sent out in December, Reuters cited data from Refinitiv Eikon. US imports of Venezuelan crude averaged under 0.5 million b/d last year. The biggest buyer was Citgo, followed by Valero, Chevron and PBF.
“The sanctions come at a time of restricted supply of heavy sour crude and so it may be challenging to replace Venezuela’s barrels but not impossible. Similar quality crudes could be sourced from different sources, most likely from Latin America and Canada,” according to Gibson Shipbrokers.
There is also a possibility of higher shipments from the Middle East, but that will be subject to OPEC’s willingness to increase production.
“The loss of Venezuela-US crude trade is a negative for regional Aframax and Suezmax demand, although this in part will be mitigated if trade from other Latin American countries rises as a result.”
Furthermore, Venezuela’s state-run oil firm PDVSA plans to divert the volumes effected by sanctions to China, Russia and India, where Rosneft has an equity stake in refining assets.
Several cargoes which had been en route from the US to Venezuela when sanctions were announced have been rerouted elsewhere. If Venezuela is unable to find alternative suppliers of diluent, about 250,000 – 300,000 b/d of the country’s output could be at risk, Gibson said.
The latest sanctions are also expected to halt Venezuela’s imports of other clean US products, with shipments averaging around 80,000 b/d in 2018.
World Maritime News Staff; Image Courtesy: Flickr-Kees Torn under CC BY-SA 2.0 license