Bloomberg News reported Friday (Jan. 22) that millions of barrels of Venezuelan heavy Crude Oil embargoed by the United States have been smuggled to China.
To avoid detection and sanctions, the cat-and-mouse game involves not only ship-to-ship transfers, shell companies and blocked satellite signals, but also “adulterating” the oil with chemical additives and changing its name in documents so it can be sold as a completely different crude without any trace of its Venezuelan origin, the report said.
Invoices and emails reviewed by Bloomberg News show that some traders went to great lengths to disguise the origin of the crude and ship it to Asia, making Chinese refineries a vital lifeline for Venezuela’s battered oil industry.
Documents seen by Bloomberg News show that crude oil loaded in Venezuela was treated with chemical additives off the coast of Singapore and reappeared on the market with a new name for the cargo. Geneva-based Swissoil Trading SA of Geneva conducted the transactions involved in the documents on behalf of a Mexican oil trader (Libre Abordo SA), which came under U.S. sanctions last June for buying Venezuelan crude.
Blending is not illegal; it is used to bring oil up to specific chemical specifications to meet contractual obligations or to remove impurities. However, hiding the origin of crude oil and renaming it is prohibited.
Bloomberg has seen documents of at least 11.3 million barrels of Venezuelan oil sold by Swissoil last year and sold to China under other names.
Customs data suggests that these documents represent just the tip of the iceberg and that other companies are engaging in such adulteration and sales.
China has not officially imported Venezuelan crude since September 2019, while its oil purchases from Malaysia soared in 2020 to the highest level since 2004, even though Malaysia did not significantly increase its heavy crude production capacity during the year. And more than half of Venezuela’s oil exports last year went to China, Bloomberg’s shipping data show. By December of last year, all of Venezuela’s oil exports went to China.
Bloomberg News said China’s Ministry of Commerce and General Administration of Customs did not respond to faxes seeking comment.
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