LONDON / SINGAPORE / MEXICO CITY, July 22 (Reuters) – A Chinese logistics company has become a key player in the supply of sanctioned oil from Iran and Venezuela, even after Washington announced it two years ago for handling Iranian crude Blacklisted sources with knowledge of the deals told Reuters.
The more prominent role of China Concord Petroleum Co, also known as CCPC, and its expansion to trade with Venezuela has not been reported, and it highlights the limits of Washington’s restriction system, analysts say.
The details of the deal were described to Reuters by a number of people, including a China-based source familiar with CCPC’s operations, Iranian officials, and a source at Venezuelan state-owned oil company PDVSA.
CCPC entered the Venezuelan oil trade this year by doing business with small independent Chinese refineries known as teapots according to PDVSA’s monthly loading schedules, export plans and invoices from April and May this year, as well as tanker tracking data and the PDVSA source.
The Hong Kong-registered company has quickly become a key partner for Caracas, chartered ships in April and May that carried over 20% of Venezuela’s total oil exports or nearly $ 445 million in crude oil, such as the PDVSA documents and tanker tracking data showed. According to the documents, CCPC did not charter any ships carrying Venezuelan oil in June.
Many refineries around the world, including state actors in China, stopped buying crude oil from Iran and Venezuela after the US imposed sanctions that cut millions of barrels in exports and billions of dollars in revenue every day.
Tehran and Caracas depend on oil revenues to run their countries. Since then, Tehran and Caracas have had an elaborate cat-and-mouse game with Washington to continue exporting crude oil and employ numerous techniques to avoid detection, including ship-to-ship transfers, mailbox companies, and middlemen who operate outside of US finance. Continue reading
Last year, CCPC acquired at least 14 tankers to transport oil from Iran or Venezuela to China, two of the sources said.
A person reached by Reuters on CCPC’s registered phone number said they were unaware of CCPC’s business activities. She refused to be named. An email to an address listed on the US Treasury Department’s website was not replied to.
PDVSA and Venezuela’s Ministry of Oil did not respond to a request for comment. The Iranian oil ministry also declined to comment.
“China has normal, legitimate trade relations with Iran and Venezuela under international law that deserve respect and protection,” said a Chinese Foreign Ministry spokesman on questions about the role of Chinese companies in the trade in sanctioned oil.
“China firmly opposes unilateral sanctions and urges the United States to lift long-arm jurisdiction for businesses and individuals.”
‘AXES OF LOAD CAPACITY’
US officials typically prohibit Iranian or Venezuelan oil supplies purchased from Chinese or international customers. But they can make it harder for those involved in trading to trade by banning US citizens and corporations from dealing with them and making them pariah to Western banks.
In 2019, Washington added CCPC to a list of companies sanctioned for violating restrictions on the handling and trade of Iranian oil. The company has not commented publicly on the sanctions, and Reuters has been unable to determine the impact the US blacklist has had on CCPC.
CCPC supplies Iranian oil to half a dozen Chinese teapot refineries, three China-based sources said.
The sources declined to reveal the identity of these refineries or to be named because of the sensitivity of the matter. The documents examined by Reuters did not contain the names of the refineries.
Iranian officials familiar with the matter confirmed that the CCPC was a key player in Tehran’s oil trade with China.
According to Refinitiv Oil Research, China received an average of 557,000 barrels of Iranian crude oil per day between November and March, or about 5% of total imports from the world’s largest importer to Iran in 2018. read more
China’s imports of Venezuelan crude oil and fuel averaged 324,000 barrels per day (bpd) below pre-sanctions levels last year through the end of April, but still more than 60% of Venezuela’s total oil exports, according to cargo tracking specialist Vortexa Analytics. Continue reading
The sanctions against Venezuela’s PDVSA were imposed in 2019 as part of an attempt to overthrow the country’s socialist president, Nicolas Maduro.
The U.S. Treasury Department declined to comment when asked about the crucial role the CCPC played in facilitating oil trade with Iran and Venezuela, but said the agency is continuing to pursue the measures.
Julia Friedlander, a former senior sanctions officer with the US Treasury Department, said the growing blacklisted oil trade shows how opponents are getting better at bypassing.
“It shows that there are limits to what US sanctions can do, especially when targeting multiple like-minded or selectively like-minded actors like oil traders. So you’re incentivizing these alternate axes of resilience, ”said Friedlander, who is now a Senior Fellow at the Atlantic Council’s GeoEconomics Center.
The sanctions have hit the economies of Iran and Venezuela, dealing a severe blow to their tanker fleets, which are overloaded and in need of overhaul, according to analysts and publicly available data on the PDVSA’s fleet.
The 14 tankers acquired by CCPC have a capacity of around 28 million barrels of oil. At least one other tanker is also connected to CCPC, increasing its capacity to about 30 million barrels, the two sources said.
Iran exported more than 600,000 bpd of crude oil in June, according to a Reuters poll. This compares to a high of 2.8 million bpd in 2018 before sanctions were imposed, but up from 300,000 bpd in 2020, according to estimates based on tanker tracking data.
Additional coverage from the Beijing newsroom, Parisa Hafezi in Dubai and Daphne Psaledakis in Washington; Editing by Simon Webb, Veronica Brown and Carmel Crimmins
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