Venezuela imports Urals crude from Rosneft

Kommersant reports that Russian oil companies are now supplying oil to Venezuela. The United States had relaxed sanctions against Venezuela's oil sector until April, but the risk of falling under restrictions again is prompting Venezuela to increase its own oil exports. In February, the country exported over 650,000 barrels per day (b/d) and has now decided to purchase Russian oil for its own processing.
According to Kpler, the Ligera supertanker, carrying 1.8 million barrels of Russian-origin oil, is preparing to transport Urals crude to Venezuela. The ship is currently located near the local port of Jose. Ligera received the oil through STS transshipment from the Nautilus and Julia A tankers, which departed from the ports of Novorossiysk and Ust-Luga with Urals cargo belonging to Rosneft and Surgutneftegaz, respectively. In February, the Russian Federation supplied Venezuela with 260 thousand barrels of diesel fuel produced by TAIF.

Venezuela primarily uses its own heavy oil, which is mixed with naphtha or gas condensate to obtain raw materials of the appropriate quality. During 2022-2023, the country also purchased oil from Iran, which became its largest supplier. However, the volumes of such transactions remained small. In March 2023, they peaked at 89 thousand b/d, and from July of the same year, they ceased entirely.
Since 2019, Venezuela has been under pressure from US sanctions, including a ban on oil trade with state-owned PDVSA. As a result, the country has had to sharply reduce its oil exports, leading to a significant loss of revenue. Additionally, the economic crisis and lack of new investments in the industry have caused a reduction in production. Currently, Venezuela produces approximately 800 thousand b/d, which is more than 1.6 times less than in 2018. In October 2023, the United States lifted sanctions on the Venezuelan oil sector for six months.

As a result, in February, Venezuelan oil exports reached a four-year high of 660 thousand b/d, with about a third of this volume being purchased by the United States.

The decision to ease sanctions coincided with the price of oil exceeding $100 per barrel in September 2023, as Russia and Saudi Arabia voluntarily reduced exports. The purpose of easing the sanctions was to reduce the cost of raw materials, which have since decreased by 20%.
Since February 2022, the Russian oil industry has been under EU and US sanctions due to the outbreak of hostilities in Ukraine. As a result, the Russian Federation redirected oil flows that previously went to Europe to mainly Asian markets.
Venezuela will be the main focus of oil markets in the coming month as the Biden administration decides whether to extend its six-month sanctions relief. According to Kpler's Victor Katona, PDVSA is seeking to maximize its oil exports, which is why they rose to a four-year high in February. According to the analyst, PDVSA now receives hard currency for oil sales, which is a much better option than the previous oil-for-debt deals with mainly Chinese companies. The analyst also notes that Urals plays the role of a substitute for Venezuelan oil in this coordinate system. Mr. Katona states, "Urals in this coordinate system plays the role of a substitute for Venezuelan oil. Urals is easier to process than any grade of Venezuelan oil, and given the revenue that has emerged, PDVSA can purchase it. Urals is easier to process than any grade of its own oil, and given the revenue that has emerged, PDVSA can purchase it." The supply of Russian diesel fuel, intended for the domestic market, faces a similar situation. PDVSA takes advantage of this and sends all the oil for export, replacing it with petroleum products from 'friendly countries'.