Venezuelan petroleum exports to Cuba surge in response to US sanctions

(SP GLOBAL) Caracas, Venezuela — Venezuela has increased oil supplies to ally Cuba in May four-fold as US sanctions severely limit exports to other countries, PDVSA documents show.

According to the documents, seen by S&P Global Platts Thursday, state-owned PDVSA exported 1.416 million barrels of combined crude and products in May to Cuba’s state Cubametales, up from 355,000 barrels in April.

PDVSA sold 646,000 barrels of diluted crude oil (DCO) at Dated Brent minus $9.60/b to Cubametales, which exports and imports metals, fuels and lubricants, the documents show. PDVSA also sold 200,000 barrels of natural gasoline to Cubametales at non-Targa Mont Belvieu natural gasoline plus 6.90 cents/gal and 120,000 barrels of light virgin naphtha at non-Targa Mont Belvieu natural gasoline plus 14.20 cents/gal.

The DCO was scheduled for May 22-23 delivery on the PDVSA tanker Yare, while the natural gasoline and naphtha were scheduled for delivery May 17-19, on PDVSA’s Manuela Saez. Both tankers are to arrive in the Cuban port of Matanzas.

PDVSA also sold 450,000 barrels of 3% sulfur fuel oil to Cubametales, at US Gulf Coast Waterborne HSFO minus $3.47/b, for May 22-24 delivery on an unspecified tanker, the PDVSA documents showed.

According to Platts cFlow trade flow software, the Manuela Saez was last seen off the Cuban coast between May 10 and May 19, while the Yare has been lingering off the Venezuelan coast near Amuay for the past 14 days.

PDVSA and Cubametales were not immediately available for comment.

DCO is being sent to Cuba because inventories are high in Venezuela, as US sanctions have reduced exports.

“The sanctions imposed by the United States on PDVSA have made it difficult for Venezuelan hydrocarbons to be placed on the international market, which is why Cubametales was supplied with alternative volumes to those originally agreed,” one of the documents said.

The original contract to Cuba was for the sale of Mesa 30 and Merey 16 crudes.

The PDVSA documents also cited high inventories of natural gasoline and light virgin naphtha at Venezuela’s El Palito and Jose terminals because of the US sanctions.

The Cuba-Venezuela Intergral Cooperation Agreement (CIC) allows for the delivery of alternative crudes and products when needed. Under the agreement, Venezuela supplied 98,000 b/d of crude and refined products to Cuba in exchange for goods and services. According to preliminary numbers, PDVSA in 2018 supplied Cuba with 33,840 b/d of DCO and 154,390 b/d of fuel oil. In the first quarter of 2019, PDVSA supplied Cubametales with 31,320 b/d of diesel. No other data was available.


While PDVSA’s petroleum exports to Cuba have not been entirely interrupted by US sanctions, lower oil production and cut refinery runs, supply has been erratic in terms of volumes and types of products. In April, PDVSA sent Cuba 300,000 barrels of Lagomar crude and 55,000 barrels of kerosene, a significant reduction from March when 500,000 barrels of fuel oil, 300,000 barrels of diesel, 110,000 barrels of natural gasoline and 30,000 barrels of propane were exported.

On May 10, the US Treasury Department announced sanctions on two companies and two tankers it said had delivered crude from Venezuela to Cuba from late 2018 through March 2019. The sanctions, which the US said were imposed in response to the recent arrests of Venezuelan National Assembly members were imposed on Marshall Islands-based Monsoon Navigation, the registered owner of the Ocean Elegance, a crude tanker, and Liberia-based Serenity Maritime, the registered owner of Leon Dias, a chemical and oil tanker.

In April, the US sanctioned three Liberia-based Jennifer Navigation, Lima Shipping and Large Range, and three of their tankers, which Treasury claimed facilitated crude or oil products deliveries from Venezuela to Cuba during February and March.

It also sanctioned Italy-based PB Tankers and six of its tankers after Treasury said it facilitated a delivery of oil products from Venezuela to Cuba in March.

The US unveiled its sanctions on PDVSA in January. These have served as a de facto ban on US imports of Venezuelan crude and an immediate ban on US exports of diluent to Venezuela. On April 28, the US prohibited transactions between non-US companies and PDVSA involving the US financial system, essentially banning the use of US dollars in all transactions with PDVSA.

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