Page 7 - MEOG Week 21 2022

MEOG PIPELINES & TRANSPORT MEOG

Iran to implement condensate-for-

crude swap deal with Venezuela

IRAN IRAN appears to be moving forward with imple- from the oil analytics firm Vortexa, Argus Media
mentation of the co-operation deal signed dur- reported last week that the Iranian tanker Dino
ing Oil Minister Javad Owji’s visit to Caracas was expected to discharge 370,000 barrels of Ira-
earlier this month. nian Heavy crude at Venezuela’s Jose terminal
That agreement provides for Iran to supply soon. This grade, which has a specific gravity of
the South American state with refinery equip- 29.5 degrees API, is a lighter alternative to Vene-
ment, as well as assistance with overdue work at zuelan’s Merey grade, which has a specific gravity
the state-owned El Palito refinery in Carabobo. of 16.2 degrees API.
The 140,000 barrel per day (bpd) facility has The recent uptick in Iranian shipments to
not been able to keep to its regular repair and Venezuela is happening as Chinese demand for
maintenance schedule, as its owner, the national Iranian crude slips as a consequence of lock-
oil company (NOC) PdVSA, is a target of US downs related to coronavirus (COVID-19) lock-
sanctions. downs. This drop in demand has freed up Iranian
The recently penned deal between Teh- inventory, and much of this has been rerouted to
ran and Caracas also provides for Iran to send Venezuela instead. Whether this ramped up sup-
shipments of gas condensate to Venezuela ply will persist in the future remains to be seen,
in exchange for Venezuelan crude. PdVSA is though.
already using Iranian condensate to dilute and As the main purchaser of both Iranian and
upgrade extra-heavy oil from the Orinoco belt Venezuelan crude exports, China has significant
into an exportable grade of synthetic crude. leverage over both nations’ export plans. Mean-
Since last autumn, deliveries of this blend- while, as Argus noted, there is another factor in
stock have played a significant role helping Ven- play – the availability of extra cargoes from Rus-
ezuela’s oil sector recover from the ravages of the sia, which is another major supply source for the
sanctions. As a result, production levels rose to Chinese market.
700,000 bpd in the first four months of 2022, In the event that Chinese buyers opt to pur-
marking a stark rise on the 470,000 bpd figure chase Russian Urals crude that has been heav-
posted in the same period of last year. ily discounted because of Western sanctions,
Meanwhile, Iran is expanding the range of Iranian and Venezuelan exports to China could
blendstock deliveries to Venezuela. Citing data decline.™

Week 21 25•May•2022 www. NEWSBASE .com P7