Recently, a leading buyer of Venezuelan oil, China National Petroleum Corp (CNPC) cut cargo loading for in September.
The cutting down happened after the state oil giant appears to avoid breaching U.S. sanctions. This is according to two sources with knowledge of the matter.
Last month, CNPC made a shocker pause in loading Venezuelan oil. This is in the wake of Trump administration in early August that froze Venezuelan government assets in the U.S.
Moreover, officials cautioned companies in opposition to dealing with Venezuela’s state-run oil company, Petróleos de Venezuela, S.A., or PDVSA.
On Monday, a spokesperson with direct knowledge of CNPC’s position indicated “CNPC at the group has made it clear not to load Venezuelan oil.”
He stated information without giving a timeline on how long the suspension would persist.
In the prior month, a separate senior Chinese industry source stated that CNPC clarified the Trump administration’s executive order as a potential prelude.
The command is for more widespread sanction measures that could hit CNPC as a leading oil buyer of Caracas.
Meanwhile, CNPC declined for a comment.
Rosneft Serves Main Trader of Venezuelan Crude
In a news report last month, the move came as Russian state oil major Rosneft has turned out to be the chief trader of Venezuelan crude.
It is shipping oil to other buyers and helping Caracas offset the loss of traditional dealers. These are the ones who are avoiding it for worry of breaching U.S. sanctions.
This month, a PDVSA crude oil loading program seen by news reports validates that there are no CNPC cargoes planned so far.
PDVSA did not also respond to a request for comment.
The executive order Trump issued on August 5 did not sanction non-U.S. companies that do business with PDVSA.
Businesses including partners in crude operations like France’s Total SA, as well as Russian and Chinese customers.
However, the order warns to freeze U.S. assets of any individual or company decided to have “materially assisted” the Venezuelan government.
Warnings from Purchasing Venezuelan Goods
At a recent discussion between the National Development & Reform Commission (NDRC), other Chinese crude oil consumers have also been warned from making Venezuelan purchases.
According to a source who was informed on the meeting, those were China’s state planner and about six independent refineries.
The source stated, “At the meeting, NDRC told these plants, which process Venezuelan crude, to make bitumen, that there will not be supplies from CNPC and that they should look for replacements to maintain production.”
Meanwhile, the two spokespersons wished to stay anonymous due to the sensitive nature of the matter.
Moreover, NDRC did not instantly acknowledge a request for a statement.
Nearly all of the deliveries of Venezuelan crude oil and refined products to CNPC are to pay back billions of dollars. This was from when Beijing borrowed to Caracas. The process was through oil-for-loan pacts.
PDVSA has never neglected to deliver crude oil to China by repaying debts. Over the last decade, refinancing and grace periods were settled to ease the debt burden.
In July, Chinese customs data showed China’s Venezuelan crude imports tumbled 40% to just over 700,000 tonnes. It is the lowest monthly amount in nearly five years.