Bloomberg uncovered a scheme to supply Venezuelan oil to China bypassing US sanctions

Millions of barrels of Venezuelan oil are being secretly shipped to China despite US sanctions, found Bloomberg . Journalists broke the "oil market's most poorly guarded secret" with documents showing transactions through a network of front companies, transferring cargo from one ship to another, and changing the grade of oil with the help of chemical additives.

Deliveries to Chinese refineries have become "vital" for Venezuela's oil industry, which is suffering from US restrictions, writes Bloomberg. It is noted that Washington cannot directly prohibit Chinese or any international companies from buying Venezuelan oil, but can greatly harm them indirectly by banning work with American companies, so traders are trying to hide cooperation with the republic. But they are willing to take the risk, as we are talking about a very large margin, Scott Modell, managing director of Rapidan Energy Advisors, explained to the agency.

The documents examined by Bloomberg, in particular, include the Swiss company Swissoil Trading, which previously fell under the investigation of the FBI. She entered into transactions on behalf of the Mexican company Libre Abordo, which has been under US sanctions since June 2020 for buying Venezuelan oil. Journalists found that Hamaca oil loaded in Venezuela near Singapore was injected with chemical additives - the so-called "doping", and then it was displayed in documents under a different name, for example, Singma or just a bituminous mixture. In 2020, at least 11.3 million barrels of Venezuelan oil sold by Swissoil Trading were shipped to China as other grades, Bloomberg found.

Customs data indicate that other companies operate similar schemes. Officially, China has not imported Venezuelan oil since September 2019, while imports from Malaysia in 2020 rose to a record level since 2004. But data obtained by Bloomberg suggests that half of Venezuela's oil exports last year ended up in China, and by December, all of the Bolivarian Republic's exports were to the Asian country.

• The situation in Venezuela escalated in early 2019, when opposition leader Juan Guaido, whose appointment to the post of speaker of parliament was annulled by the Supreme Court, proclaimed himself interim head of the republic. He was supported by the United States, France, Great Britain and Israel. But Nicolas Maduro managed to stay in power, Russia continues to consider him the legitimate president.
• Experts polled by Bloomberg expect Venezuelan oil supplies to grow despite sanctions. There is an excess of light grades in the world due to the growth of shale production in the United States, but a shortage of heavy oil due to sanctions against Venezuela and Iran.

Find out more

Back in November 2020, Reuters wrote about the supply of Venezuelan oil to China, citing data from the analytical company Refinitiv Eikon and official documents of the Venezuelan state-owned company PDVSA. The agency then did not rule out that Russia was playing a role in this. We talked about it in more detail here .