China's biggest energy company shuns Venezuela oil on tighter US sanctions
[HOUSTON] China's biggest energy company is backing away from direct purchases of Venezuelan crude as the Trump administration tightens sanctions against the South American nation.
China National Petroleum Corp (CNPC) has cancelled plans to load about 5 million barrels worth of Venezuelan oil onto ships this month in the aftermath of the latest executive order by President Donald Trump, according to people with knowledge of the situation who asked not to be identified discussing proprietary information.
CNPC joins Turkey's largest bank, Ziraat Bank, which severed its relationship with Venezuela's Central Bank following sanctions. The moves represent a setback for Venezuelan President Nicolas Maduro, who has been counting on both China and Russia to keep the country going amid a humanitarian crisis, food shortages and hyperinflation.
China became the top destination for Venezuelan crude after US sanctions against state-owned Petroleos de Venezuela SA were announced at the end of January. Venezuela may run low on options without the help of CNPC to export oil, a main source of revenue that bankrolls the Maduro regime. The three August-loading cargoes cancelled by CNPC's subsidiary PetroChina Co Ltd haven't so far attracted another buyer, according to reports seen by Bloomberg.
PetroChina's press office declined to comment on market speculation, citing company policy.
On Aug 5, Mr Trump signed an executive order authorising sanctions on anyone who provides support to Mr Maduro. Opposition leader Juan Guaido, recognised by the Trump administration as the country's leader, is backed by more than 50 countries.
PetroChina's pullback doesn't mean China will completely turn away from Venezuelan oil. Other companies can continue to supply China's independent refiners known as teapots with the South American nation's crude, according to people familiar with the matter.
China has been a staunch supporter of the Venezuelan government since its first oil-backed loan to late president Hugo Chavez. The Asian nation has loaned US$50 billion in the past decade in exchange for oil. China, along with Russia, is one of 14 nations that support Mr Maduro.
This will be the first time in more than a decade that PetroChina forgoes Venezuelan crude, according to data compiled by Bloomberg. China has imported 339,000 barrels a day of Venezuelan oil this year. Most of the barrels come via PetroChina, but in the wake of US sanctions, Russia's Rosneft Oil Co PJSC has stepped up to supply Venezuelan oil to the country's independent refiners.
BLOOMBERG
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Energy & Commodities
Oil jumps, equities fall as Iran blasts fan Middle East tensions
Gold set for fifth weekly gain as geopolitical risks buoy demand
Oil holds near 3-week low as US sanctions interrupt easing tensions
Seatrium unit ordered to pay US$108 million in arbitration over equipment supply contracts
BP reshapes its leadership team as some executives leave
BHP to decide on future of nickel business by August, trims met coal estimates