Crippled by US sanctions, Venezuela starts selling oil to tiny Turkish company

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Screengrab taken from a handout video released by Venezuelan Television (VTV) showing Venezuelan President Nicolas Maduro (C), his wife Cilia Flores (L) and military authorities reacting to a loud band during a ceremony to celebrate the 81st anniversary of the National Guard in Caracas on August 4, 2018. Maduro was unharmed after an exploding drone "attack", the minister of communication Jorge Rodriguez said following the incident, which saw uniformed military members break ranks and scatter after a loud bang interrupted the leader's remarks and caused him to look to the sky, according to images broadcast on state television. / AFP PHOTO / VENEZUELAN TELEVISION (VTV) / HO /

With US sanctions blocking Venezuela from selling oil to the United States, state-owned energy firm PDVSA has turned to several little-known buyers that include a tiny Turkish company with no refineries but ties to President Nicolás Maduro’s government, according to internal documents and a PDVSA source, Reuters reported.

Until recently, some of the world’s largest petroleum and refining firms, including US companies Chevron and Valero Energy, lined up to take Venezuelan oil cargoes, and PDVSA had a rigorous vetting process to ensure potential buyers had the capacity to pay.

But US sanctions imposed in January in an effort to oust Maduro have driven away many of those customers. PDVSA’s exports have slumped by more than a fifth since sanctions were imposed, according to company records and Refinitiv Eikon data. Its biggest buyers today are Chinese and Indian companies.

Three sources with knowledge of the matter told Reuters that directors at a March 14 meeting of PDVSA’s board temporarily waived some requirements for new customers or suppliers, including that of having at least two years’ experience in the oil industry.

In the wake of the changes, a Turkish company called Grupo Iveex İnşaat started buying Venezuelan oil in April, according to documents related to PDVSA loading plans and internal reports on exports and imports for the first half of the year reviewed by Reuters.

İstanbul Chamber of Commerce records show that Iveex İnşaat was formed less than a year ago with capital of just 10,000 lira ($1,775) and listed “residential construction” as its main activity.

It was one of only five firms that loaded tankers to take Venezuela’s upgraded crude — among its most valuable oil — from April through June, the documents showed. Iveex loaded four cargoes of Venezuelan crude and products in April — equivalent to just under 8 percent of Venezuela’s oil exports — and nothing in May or June, according to PDVSA documents.

Turkish corporate records show Iveex İnşaat is owned by Miguel Silva, a Venezuelan businessman who heads the Caracas-based Venezuelan Exporters’ Chamber and also served as a housing ministry commissioner in Maduro’s administration.

The PDVSA source, a shipping broker and a maritime inspector — all of whom declined to be named — told Reuters that Iveex had agreed to deliver refined products to Venezuela in exchange for receiving crude. With its refinery network crippled by maintenance issues, the OPEC nation has struggled with severe fuel shortages in recent months.

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