Millions of barrels of crude oil that the United States seized from Venezuela were secretly sold

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It may be the worst-kept secret in the oil market millions of barrels of Venezuelan heavy crude, embargoed by the United States have surreptitiously gone to China.

Cat and mouse games that avoid detection and penalties include ship to ship transfers, shell companies, and silenced satellite signals. But there is another key aspect to avoid and mislead the authorities mixing the contents of the barrels with chemical additives and changing its name in the documentation so that it can be sold as a completely different crude without leaving a trace of its Venezuelan roots.

The invoices and emails reviewed by Bloomberg show how far some traders will go to disguise the origin of the crude and take it to Asia, making Chinese refineries an essential livelihood for Venezuela's ailing oil industry. US officials, of course, cannot prohibit Chinese or international companies from buying Venezuelan oil. However, they can squeeze them financially by banning them from doing business with American companies. That is why such intricate steps are taken to disguise the origin of the raw.

Still, enforcement of the US embargo is difficult, said Scott Modell, managing director of Rapidan Energy Advisors LLC. There are so many ways to circumvent sanctions. There are many people willing to take the risk because there is a lot of money to be made.

The documents show crude that loaded in Venezuela, like one called Hamaca, are treated with chemical additives off the coast of Singapore and reappear on the market as cargoes with new names like Singma or simply a bituminous mixture. Swissoil Trading SA, a Geneva-based house, carried out the transactions acting on behalf of the Mexican oil company Libre Abordo SA, which was sanctioned by the United States in June for buying Venezuelan crude.

In an email seen by Bloomberg, a Swissoil merchant trading Singm urged a counterparty to violate standard industry practice by keeping original cargo documentation outside of a tanker. Putting original BL on board a ship is crazy, don't do it, said the merchant, referring to bills of lading. You don't understand the problem you are getting into.

In an email responding to questions from Bloomberg, the company's attorney said Swissoil Trading SA is not trading and has not traded crude oil from Venezuela.

However, Bloomberg had access to documents showing that Swissoil sold and delivered to China last year at least 11.3 million barrels of Venezuelan oil under the guise of other names.

Customs data suggests that these documents represent the tip of the iceberg and that other companies are also engaged in these types of illegal activities. China has not officially imported Venezuelan crude since September 2019, while its purchases from Malaysia, which have not significantly increased its heavy crude production capacities, in 2020 rose to the highest level in data dating back to 2004 . But the data collected shows that more than half of Venezuela's oil exports last year ended up in China. And by December, the Asian giant accounted for all of the country's oil exports.

Last April, the Celestial ship loaded Venezuelan crude from an oil tanker off the coast of Malaysia. He then sailed to an area a few miles off the coast of Singapore known as Western Petroleum Bravo, not far from Universal Studios Singapore and some of the best resorts and golf courses in Asia. There he received 30 containers of chemical additives at a cost of $ 233,000 that were paid for by Swissoil. Gentlemen, this is the doping fee, said a company employee in an email exchange with Libre Abordo, the company that originally lifted the charge in Venezuela. "I'm sure we'll need these guys in the future, make sure they get paid soon.

After the Celestial raised the anchor, its cargo in the barrels was renamed the Singma Blend. Singma and Hamaca are chemically about the same, according to analyzes studied by Bloomberg . A month after the deal, Swissoil sold the crude to a Hong Kong company, Dayuan Import & Export Co Ltd., a China middleman. In emails between the companies, the oil is not identified as originating from Venezuela.

Doping (adding chemicals to crude oil) is not illegal and is used to bring oil to certain specifications to meet contractual obligations or remove impurities. However, it is forbidden to hide the place of origin of the crude oil and change its name . Multiple submissions seen by Bloomberg emphasize the importance of ensuring no original documents are placed on board that could identify where the oil came from. In an email, a Swissoil trader with Venezuelan crude emphasized “please make sure the vessel does not set sail with originals on board. Originals will not be placed on board any vessel, given the origin of the cargo ... ”.

Swissoil and his CEO, Philipp Apikian, among other businessmen, were sanctioned by the United States Department of the Treasury on January 19 for doing business with Venezuela , after Bloomberg requested comment for this article. The company did not respond to a third request for comment after they were placed on the embargo list. China's Ministry of Commerce and General Administration of Customs did not respond to faxes seeking comment for this article.

For its part, the Libre Abordo company, which filed for bankruptcy in May, did not respond to emails seeking comment. Additionally, the phone numbers previously associated with your executives are disconnected or out of service. Dayuan did not respond to an email seeking comment, and several calls to his Hong Kong-based office went unanswered.

China's national oil company, China National Petroleum Corp., cut off direct purchases from Venezuelan traders. But the Caribbean country's oil still has great appeal, especially for companies that do not deal directly with the US. Only special refinery units called cokers can process Venezuela's tar-like crude, and China has the world's largest coking capacity after the US.

Washington imposed sanctions on PDVSA in early 2019, sending its sales last year to a 71-year low and straining Caracas cash flow . But the crude that Venezuela produces is still in demand. In November alone, Venezuela exported 15 million barrels of oil valued at about $ 660 million, according to Bloomberg data .

Maduro needs all the money he can put in his hands to finance the military apparatus that protects the regime, said Diego Moya-Ocampos, a political risk consultant at IHS Markit in London.

Moya-Ocampos said, with the change this week of US presidents from Donald Trump to Joe Biden, Venezuelan oil exports may see a limited revival. Biden officials can ease the latest restrictions on so-called fuel swaps, in which companies sell gasoline to PDVSA in exchange for a payment in crude oil.I would venture to say that we will see more Venezuelan oil on the market in the near future.

This Article Originally Published in Infobae