August 22, 2019

UPSTREAM EXTRA! - Implications for Venezuela Crude from China Actions

Stratas Advisors

This excerpt is from a report that is available to subscribers of Stratas Advisors’ Upstream and Latin America services.

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According to Bloomberg report published on August 16, CNPC halted loading Venezuelan crude oil for the month. If the information proves true, this will be the first time in a decade that the Chinese national oil company completely cancels on its Latin partner. As of now, there has been no confirmation of a position change on Venezuelan affairs from CNPC or the Chinese government.

Reuters’ export trade flow data shows approximately 329,000 b/d of Venezuelan crude is scheduled to arrive in Chinese ports in August. Additionally, 115,000 b/d of Venezuelan crude is set to depart for China in August and arrive 1-2 months later. It is not clear how, or if, these volumes will be impacted.

 Source: Stratas Advisors, Reuters

If true, reasons behind CNPC’s decision to back off from Venezuela crude purchases are unclear. In the absence of confirmed reports from CNPC and government officials, Stratas opined on a number of explanations for a change. The paragraphs that follow summarize those views.
 
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