Venezuelan petrochemicals arrive in U.S. despite Washington trade curbs

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HOUSTON/CARACAS — Venezuelan petrochemicals produced in a joint venture between state-owned chemical company Pequiven and foreign partners have arrived in the United States, despite Washington’s efforts to restrict trade with OPEC oil and gas producers.

According to Tanker Tracking and the US, two cargoes of methanol, a widely used industrial product, whose prices have surged since October this year, were disembarked from ports in the Houston area as global sales of petrochemicals and petroleum by-products in Latin American countries surged. customs data.

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The shipments represent a new, unreported effort to boost imports, even as the U.S. cut essential crude exports to the oil industry to its lowest level in 77 years.

U.S. sanctions were aimed at ousting President Nicolas Maduro, whom Washington thought was fake, in the last presidential election. Maduro claims that voting in 2018 was free and fair.

Mitsubishi Corp will resume methanol exports to the US from its Venezuelan joint venture Metor in 2021, a Mitsubishi spokesperson told Reuters. Metor’s shareholders are Petroquimica de Venezuela or Pequiven.

Refinitiv Eikon tracking data showed that Jose, Venezuela’s main oil port, was listed as an origin in US customs records for one of the two methanol shipments, but both sailed directly from Venezuela.

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The names of the buyers and sellers for the two methanol cargoes arriving in Houston were modified from US customs data provided to Reuters by consulting firm IHSMarkit.

The US Treasury Department and US Customs and Border Protection Agency declined to comment on the shipment.

Pequiben, who did not respond to Reuters’ request for comment, tweeted in July that Metor was exporting methanol to Europe, Latin America and Asia.

Expanding sanctions

A 2019 US executive order sanctioned the Venezuelan oil industry, which was used to blacklist state oil company PDVSA and its subsidiaries. Subsequent orders expanded sanctions against government-owned or controlled companies. State-owned Pequiven and Venezuela’s petrochemical business were not specifically mentioned.

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“Metor itself shouldn’t be sanctioned,” said Daniel Pilarski, a partner at Watson Farley & Williams LLP, a New York-based law firm.

“However, if Pequiven is the ultimate sender of methanol, there is a risk that any shipment to the United States will be treated as an indirect receipt of goods at Pequiven,” said Pilarski.

He said companies exporting Venezuelan methanol to the US could either obtain a permit from the US Treasury Department to allow trade or take other steps to ensure that Pequiven is not treated as an indirect seller.

Produced from natural gas in Venezuela, methanol can be found in everyday products including gasoline, paints, carpets and plastics. According to IHSMarkit, US imports have surpassed exports in recent years.

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On October 7-11, the tanker PVT Aurora released approximately 16,900 metric tons of Venezuelan methanol from Texas. Part of the cargo was handled at Intercontinental Terminals Company’s (ITC) Deer Park chemical terminal, according to Refinitiv Eikon data.

An ITC spokesperson did not respond to a request for comment.

The Vietnamese vessel departed from the port of Jose serving PDVSA and Pequiven.

export expansion

According to Eikon data, a second 20,000-tonne Venezuelan methanol cargo followed a similar route, with tanker Sakura Advance unloading some cargo in Houston on November 11-13 and unloading other parcels a few days later in the South Louisiana port.

Italy’s Eni also produces methanol in Venezuela through Supermetanol, a 50:50 venture with Pequiven.

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A spokesperson for Eni said, “Eni’s affiliates own a methanol plant located in Venezuela and are dealing with equity production and marketing in relation to all applicable laws and regulations related to economic and financial sanctions, trade embargoes and similar laws.”

Pequiven and PDVSA have increased exports of petrochemicals and petroleum by-products that are not as valuable as crude oil and were not until recently a priority. According to internal data analysis of both companies.

U.S. sanctions and warnings against traditional buyers of Venezuelan crude have sharply reduced PDVSA’s exports in recent years.

However, the data shows that shipments of petrochemical products and petroleum by-products have increased, including exports of methanol, sulfur refining, urea, natural gasoline, light naphtha and petroleum coke. The three men, well versed in the matter, declined to identify themselves as they were not authorized to speak publicly.

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People said exports have increased due to lower prices being offered to buyers for Venezuela’s petrochemicals, and some Pequiven’s joint ventures have generated revenues that are used in part to reopen and renovate production facilities.

PDVSA’s more reliable supply of natural gas to the Pequiven complex also helped boost petrochemical production.

An official said, “We are in the process of restoring the factory as the sales proceeds allow.” “The US also opens its doors to Venezuela’s methanol”

According to internal data, PDVSA and Pequiven exported about 1.75 million tons of petrochemicals and by-products from January to October, and trade went smoothly this year, doubling their total exports in 2020 by 1.03 million tons.

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According to the data and the three men, methanol shipments this year ranged between 20,000 and 60,000 tonnes per month, mostly to the Netherlands, Spain, Japan and China.

Methanol prices in Venezuela vary by destination. An official said it sold for between $130 and $140 per ton from November to December. This is lower than the US spot price of $450-690/tonne. Experts say that prices vary greatly depending on delivery conditions, such as quality and freight.

In comparison, the market price of one ton of Venezuelan Merey crude oil in November delivery was about $395. (Additional report by Marianna Parraga and Gary McWilliams of Houston, Deisy Buitrago of Caracas, Yuka Obayashi of Tokyo, Matt Spetalnick of Washington, Stephen Jewkes of Milan, edited by Edmund Blair)