Trading houses and buyers of Venezuelan oil have chartered the first very large crude carriers (VLCC) to export from the South American country since a Caracas-Washington supply deal began, which is set to speed up shipments starting in March while boosting deliveries to India, according to four sources and data.
Trading firms Vitol and Trafigura have been exporting Venezuelan crude and fuel since January as part of a $2 billion deal between the US and Venezuela after the capture of President Nicolas Maduro by US forces.
Most of the exports have moved in smaller Panamax and Aframax tankers to US refineries, and in Suezmaxes to terminals in Curacao, St. Lucia, St. Eustatius and the Bahamas in the Caribbean, where traders have been storing oil and shipping it to US and European ports, according to vessel movement data.
VLCCs, which carry up to two million barrels each, can accelerate the pace of deliveries at Venezuela’s main oil terminal, Jose. The terminal is operated by state energy firm PDVSA and handles up to 70 per cent of total crude exports.
Bigger shipments could lower costs
The larger cargoes could cut transportation costs for traders and buyers, who have complained that prices around $15 per barrel below Brent for Venezuela’s Merey heavy crude agreed last month for initial purchases have become too expensive amid the market’s backwardation, in which shipments for later delivery are cheaper than near-term supplies.
At least three VLCCs chartered by Vitol and Trafigura, the Nissos Kea, Nissos Kythnos and Arzanah, have been assigned March loading windows at Jose, according to shipping data and sources familiar with the matter.
They are all bound for India, the sources said. Another supertanker, Olympic Lion, was signalling Venezuela as its destination this week with the expected arrival in late March, according to LSEG ship tracking.
Reliance Industries bought a two-million-barrel cargo from Vitol for March loading and is seeking direct purchases from PDVSA, separate sources said. India was the third-largest buyer of Venezuelan crude before Washington imposed sanctions in 2019.
The country’s oil exports bounced to some 800,000 barrels per day in January as a US oil blockade ended, but the rapid increase from some 500,000 bpd in December has left millions of barrels originally intended for US and European buyers unsold in storage. PDVSA sent three crude cargoes to Caribbean storage in January on board VLCCs it controls as part of its deals with the traders.
Trafigura declined to comment. US major Chevron and US refiners including Valero Energy, Phillips 66 and Citgo Petroleum are preparing to boost Venezuelan oil processing at their refineries, which is also expected to raise exports.
Source: Bairdmaritime