A Reuters exclusive published on Tuesday reported that China’s Sinochem Corp has purchased a million barrels of Venezuelan crude oil, which is set to arrive in December.
The unique purchase follows US’ suspension of sanctions on the South American oil producer.
Sale to China
Sinochem has agreed to buy the cargo of heavy Venezuelan Merey crude at a discount of $11 a barrel, three traders told Reuters.
The cargo is set to be delivered to Sinochem’s Changyi refinery in the eastern province of Shandong. Changyi is one of the several refineries it runs in the province.
In a statement, Sinochem’s press office said the company “consistently conducts its operations in strict adherence to legal and regulatory requirements,” and that it does not comment on market speculation.
US Sanctions on Venezuela
Sinochem has long refrained from dealing in sanctioned oil, due to fear of any adverse impact on its broader business, said senior trading sources.
Tanquero Phenix VI arribó a Amuay Anch, #Venezuela desde Liuheng, China un buque furtivo que su señal AIS puede ubicarlo en China (fake) y parece debido al levantamiento de sanciones activaron transponder. 🤔#tankers #Crudeoil #oott #oil pic.twitter.com/uC5p2SxQmK
— Armand Delon 🛢 (@DelonArmand) December 14, 2023
During the sanctions, Venezuelan crude cargoes to China were typically labelled as being from Malaysia.
In mid-October, the US suspended sanctions on Venezuela’s oil and gas exports for six months, which prompted a series of spot trades of crude and fuel through Western traders, such as Trafigura and Vitol.
China’s Previous Evasions of Sanctions on Iran
China has also circumvented the US’ sanctions on Iranian oil exports in the past.
Last September, the US Department of Treasury sanctioned “an international network of companies in the UAE, China, and India involved in the sale of hundreds of millions of dollars’ worth of Iranian petrochemicals and petroleum products to end users in South and East Asia.”
The department said that the entities “have played a critical role in concealing the origin of the Iranian shipments and enabling two sanctioned Iranian brokers […] to transfer funds and ship Iranian petroleum and petrochemicals to buyers in Asia.”