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According to data by IHS
Markit's Commodities at Sea, Venezuelan crude oil loadings in
June were around 870 thousand b/d. This suggests that activity
recovered month-on-month, however, the year-on-year decline
stabilized at rather high levels. During the first half of 2019,
Venezuela's liftings dropped by 28%. The collapse is expected to
last throughout the second half of the year, with July's levels so
far standing much lower than June.
The recovery in June, compared to May, reflects the ability of
Venezuela to load part of its inventory which has reached new
historical highs during the last couple months. Inventory has been
increasing due to the US oil sanctions and earlier problems faced
at terminals related to lack of electricity. Since February, over
75% of the country's shipments have been heading to Asia.;
primarily to China and India, with a small percentage ending up in
storage facilities in Southeast Asia.
The United States had imported around 500 thousand b/d of
Venezuelan barrels in 2018, which represented more than a third of
Venezuela's exports. However, activity quickly reached zero since
late January of this year.
Venezuela's production might have already reached its lowest, as
foreign partners of the state company PDVSA have been supporting
output to rebound. Companies such as Chevron, Rosneft, CNPC and
Repsol have joint ventures that are still in place despite the US
sanctions. Chevron still has a sanctions waiver which will expire
on 27 July. The US administration will decide whether this will be
renewed or not, which will define the future of Venezuelan
production.
Chevron has been active in Venezuela for almost a century and
together with PDVSA currently produce about 200 thousand b/d, about
a quarter of the country's total production. These volumes are
threatened in case the US government declines to renew Chevron's
waivers. The decision won't be easy for Washington since the
departure of Chevron could be followed by Russian or Chinese
companies taking over local oil fields.
Meanwhile, PDVSA is believed to have been loading some crude on
ships switching off signals, with some of the volumes ending in
Turkey and Cuba.
Elsewhere, China has been refusing to recognise Guaido's
presidency and continues to support Maduro and his government. It
will be interesting to see if anything will change in the near
future. Guaido has promised to protect Beijing's interests and
investments better than the Chavistas, with new financial
incentives to be given to China.