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

Mitsubishi Gas Chemical

18/11/2021 20:14

* Shipments reveal unreported export effort by Venezuela
    * U.S. sanctions were aimed to unseat President Maduro
    * Petrochemicals, oil byproducts less valuable than crude
    * Exports of petrochemicals, byproducts in 2021 exceed 2020

    By Marianna Parraga and Deisy Buitrago
    HOUSTON/CARACAS, Nov 18 (Reuters) - Venezuelan
petrochemicals produced by joint ventures between state-run
chemical firm Pequiven and foreign partners have arrived in the
United States, despite Washington's efforts to limit trade with
the OPEC oil and gas producer.
    At least two cargoes of methanol, a widely used industrial
product whose prices have soared this year, have discharged at
Houston area ports since October amid a rapid expansion of the
South American country's global sales of petrochemicals and oil
byproducts, according to tanker tracking and U.S. customs data.
    The shipments represent a new and unreported effort by
Venezuela to boost revenues despite U.S. sanctions on its oil
industry that cut vital crude exports to the lowest in 77 years.
    U.S. sanctions were designed to oust President Nicolas
Maduro, whose last election Washington views as a sham. Maduro
insists the 2018 vote was free and fair.
    Mitsubishi Corp  8058.T  resumed exports of methanol to the
United States in 2021 from its Venezuelan joint venture Metor
after a suspension of a couple years, a Mitsubishi spokesperson
told Reuters. Metor's shareholders include Petroquimica de
Venezuela, or Pequiven.
    Venezuela's main oil port of Jose was listed as the point of
origin on U.S. customs records of one of the two methanol
shipments, but both sailed directly from Venezuela, Refinitiv
Eikon tracking data showed. 
    Names of the buyers and sellers for the two methanol cargoes
that arrived in Houston were redacted on the U.S. customs data,
which were provided to Reuters by consultancy IHSMarkit.
    The U.S. Treasury Department and the U.S. Customs and Border
Protection agency declined to comment on the shipments.
    Pequiven, which did not reply to Reuters requests for
comment, said on Twitter in July that Metor was exporting
methanol to Europe, South America and Asia.
    
    WIDENING SANCTIONS
    A U.S. executive order in 2019 subjected the Venezuelan oil
industry to sanctions and this was used to blacklist state oil
company PDVSA and its subsidiaries. A subsequent order broadened
sanctions to cover companies owned or controlled by the
government. State-run Pequiven and Venezuela's petrochemical
operations were not specifically named.
    "Metor itself should not be subject to sanctions," said
Daniel Pilarski, a partner at New York-based law firm Watson
Farley & Williams LLP who specializes in cross-border
transactions and U.S. trade sanctions.
    "However, if Pequiven were the ultimate originator of the
methanol, then there could be a risk that any shipment to the
United States would be treated as the indirect receipt of goods
from Pequiven, which would be a violation, even if Pequiven
never received payment," Pilarski said.
    Companies exporting Venezuelan methanol to the United States
could obtain a license from the U.S. Treasury to permit the
trade or take other steps to ensure Pequiven was not treated as
the indirect seller, he said.
    Methanol, produced in Venezuela from natural gas, can be
found in everyday products including gasoline, paints, carpeting
and plastics. U.S. imports have outweighed exports in recent
years, according to IHSMarkit.
    On Oct. 7-11, tanker PVT Aurora discharged about 16,900
metric tonnes of Venezuelan methanol in Texas. A portion of the
cargo was handled by Intercontinental Terminals Company's (ITC)
Deer Park chemicals terminal, according to Refinitiv Eikon data.
    An ITC spokeswoman did not reply to requests for comment.
    The Vietnam-flagged vessel traveled from the Jose port,
which serves PDVSA and Pequiven.
    
    RAMPING UP EXPORTS 
    A second 20,000-tonne cargo of Venezuelan methanol followed
a similar route in November on tanker Sakura Advance, which
discharged some of its cargo in Houston on Nov. 11-13 and
another parcel at South Louisiana Port days later, according to
the Eikon data.
    Italy's Eni  ENI.MI  also produces methanol in Venezuela via
Supermetanol, its 50:50 venture with Pequiven.
    "Eni's affiliate holds a stake in a methanol plant located
in Venezuela and deals with the marketing of its equity
production in respect of all applicable laws and regulations
related to economic and financial sanctions, trade embargoes and
similar laws," an Eni spokesperson said.
    Pequiven and PDVSA have ramped up exports of petrochemicals
and oil byproducts that are not as valuable as crude and until
recently had not been a priority, an analysis of internal data
from the two companies showed.
    U.S. sanctions and warnings to traditional buyers of
Venezuelan crudes sharply cut PDVSA's exports in recent years.
    But shipments of petrochemicals and oil byproducts have
climbed, including exports of methanol, sulfur pastilles, urea,
natural gasoline, light virgin naphtha and petroleum coke,
according to the data. This was confirmed by three people
familiar with the matter, who declined to be identified as they
were not authorized to speak publicly.
    Low prices offered to buyers for the petrochemicals from
Venezuela have boosted exports, generating income that has
partially been used by some of Pequiven's joint ventures to
reopen and revamp production units, the people said.
    A more reliable supply of natural gas by PDVSA to Pequiven's
 complexes also helped boost petrochemical output.
    "The plants are in recovery process as proceeds from sales
have allowed," one of the people said. "Even the United States
is opening its doors to Venezuelan methanol."
    From January to October, PDVSA and Pequiven exported about
1.75 million tonnes of petrochemicals and byproducts, putting
the trade on track this year to double the 1.03 million tonnes
exported for the whole of 2020, according to the internal data. 
    Shipments of methanol this year ranged between 20,000 and
60,000 metric tonnes per month, mostly bound for the
Netherlands, Spain, Japan and China, according to the data and
the three people.
    Prices for Venezuelan methanol differ based on destination.
They fetched $130 to $140 per tonne for November-December
delivery, one of the people said. That is below U.S. spot
prices, which range from $450 to $690 per tonne. Experts say
prices vary widely depending on quality and delivery terms, such
as freight rates.
    By comparison, a tonne of benchmark Venezuelan Merey crude
for November delivery had a market price of about $395.

 (Reporting by Marianna Parraga and Gary McWilliams in Houston
and Deisy Buitrago in Caracas; additional reporting by Yuka
Obayashi in Tokyo, Matt Spetalnick in Washington, and Stephen
Jewkes in Milan; Editing by Edmund Blair)
 ((marianna.parraga@thomsonreuters.com; +1 713 371 7559; Reuters
Messaging: @mariannaparraga))