Page 6 - DMEA Week 38

DMEA COMMENTARY DMEA

cargoes in the South American state or in a US next fleet that attempts to bring refined fuels or
port. similar materials from Iran to Venezuela – and it
At least one of the third fleet’s vessels, may do so after putting more pressure on ship-
by contrast, has filled up for the return trip. ping companies and marine facilities to help
Bloomberg reported on September 23 that the thwart efforts by Tehran and Caracas to con-
Iranian-flagged tanker, known as the Horse (and ceal such shipments through the disabling of
sometimes as the Honey), had been loaded up transponders.
with Merey-16, an extra-heavy blend that is the
main grade of crude exported from Venezuela. Ongoing struggle
The oil will probably be exported to Asia, In the meantime, fuel supply issues will continue
which has become the main destination for to loom large in Venezuela. The country has
Venezuelan production, the news agency said. bought some time with the latest Iranian ship-
It did not name any possible buyers, but it did ments, but it is still struggling in the face of the
note that most crude traders would be reluctant challenges posed by the sanctions.
to buy Venezuelan product because of the risk of That struggle, according to Bloomberg, has
being penalised under the US sanctions regime. led to something like industrial cannibalism.
That is, it has driven PdVSA to strip scrap
Stepping up sanctions enforcement? metal and parts from production, processing
As of press time, the US government had not and refining facilities that have been taken
reacted publicly to news of the Iranian-aided offline. The NOC reportedly hopes to use
shipment of Venezuelan crude. these materials to pay in kind for repair work
Washington may take a different stance if at pumping stations and compressor units that
Caracas tries this tactic again, though. More serve production facilities in Monagas. This
specifically, it will probably step up enforcement state, located in eastern Venezuela, is home to
of the sanctions regime if it sees that Venezuela’s deposits of light crude oil that can be refined
government is trying to open up a new export more easily than the extra-heavy grades from
route for its oil. the Orinoco belt.
If so, some of the US actions will probably As of press time, Venezuelan authorities had
target the shipping sector. There is precedent for not said whether any potential partners had
this, as Washington has already applied sanc- shown interest in the scrap metal and parts.
tions to Russian companies accused of acting as This is not the first time Caracas has tried to
middlemen for Venezuelan exports (and has also pay in kind for refinery and production equip-
signalled its willingness to penalise marine oper- ment repairs. Venezuelan officials recently tried
ators that do business with Caracas). – and failed – to convince suppliers to accept
But there may also be more seizures. That crude oil and fuel as compensation for $800mn
is, the US may opt to confiscate the cargo of the worth of maintenance work and fixes. ™

P6 www. NEWSBASE .com Week 38 24•September•2020