Before the Trump administration began its crackdown on Caracas, the United States was the largest supplier of refined products to Venezuela. With strict sanctions in place, Venezuela has now turned to the European market, and notably Russia, in order to maintain a relatively steady level of imports of gasoline and middle distillates.
US sanctions imposed on Venezuela in January were designed to restrict the OPEC member’s crude oil exports, though they also limited the country’s ability to import refined products. Some of those products, such as diluent, are used by Venezuela to reduce the viscosity of its heavy crude oil enough to export. Venezuelan refining infrastructure, meanwhile, has collapsed over the last few years due to a chronic lack of maintenance and investment. The Paraguana Refining Complex, the largest in the Western Hemisphere, has been able to maintain operations, though output is far short of the level needed to satisfy domestic fuel demand. As a result, the country with the world’s largest oil reserves has increasingly become an importer of gasoline and middle distillates.
Before US sanctions were imposed in January, most of Venezuela’s imports of refined products came from the United States. Last year, Venezuela imported on average 31,000 barrels per day of middle distillates and 122,000 bpd of gasoline from the United States. That represented some 57 percent and 82 percent of the country’s total product imports, respectively. Venezuela unloaded its last batch of middle distillate from the United States in January and took its last cargo of gasoline in February.
Since January, the OPEC member has relied mainly on refined products from European countries such as Greece, Italy and Spain. Russia too has sent refined products to Venezuela using multiple ship-to-ship transfers offshore Malta. Over the last few months, vessels delivering products to Venezuela have used tactics such as turning off their AIS signals to mask their voyages, a strategy used by Iran to hide its exports.
Refined products moving to Venezuela are delivered increasingly through multiple STS activities and dark voyages. Many times, vessels carrying refined products to Venezuela turn off their AIS signal after passing the Strait of Gibraltar only to reappear in Venezuelan waters or on their way back to Europe. We expect this behavior to continue so long as US sanctions continue to squeeze PdVSA’s energy flows.