U.S. oil refiners won’t be allowed to complete
shipments of Venezuelan crude they booked before the Trump administration
slapped new sanctions on the Latin American nation, says Bloomberg.
U.S. Treasury Department officials have informed some
companies that previously contracted cargoes won’t be exempt from a new rule
blocking payments to Venezuela’s PDVSA, according to two people familiar with
The requirement forces purchasers of Venezuelan crude
to deposit payment into an account state-owned Petroleos de Venezuela SA can’t
The clarification puts refiners in a difficult
position, as PDVSA is now demanding up-front payment before releasing any
tankers bound for the U.S. But under the Trump administration’s Jan. 28
sanctions, U.S. companies are barred from doing business with PDVSA.
Two vessels contracted for Valero Energy Corp. and one
belonging to Chevron Corp. are anchored in Venezuela, awaiting payment. A
fourth tanker booked by Chevron may be rerouted without getting the oil it came
for, according to tanker tracking data compiled by Bloomberg.
For days, refiners had asked the Treasury Department
to issue some clarification on the new sanctions, including assurances freeing
them to pay PDVSA for transactions arranged before the restrictions were
imposed. Officials now insist that payment for those previously booked cargoes
go into the special account, even for deals with different payment terms inked
prior to the imposition of sanctions on Jan. 28, said the people, who asked for
anonymity to discuss the matter.
Newly released Treasury Department guidance did not
include language allowing payment to PDVSA for earlier crude transactions.
Representatives of the Treasury Department did not immediately respond to an
email seeking comment.
The move illustrates uncertainty over the intricacies
of the sanctions while the Trump administration tries “to write the playbook”
governing them, said Scott Modell, managing director of Rapidan Energy Group.
It’s unclear whether U.S. refiners will actually be
able to buy any Venezuelan crude during a “wind-down” period that allows those
sales through April 28 — but only as long as payments go to the special
“I have not
heard anybody walk away with a crystal clear idea as to how they are going to
proceed in the coming months,” Modell said. The administration is moving fast,
both “figuring out its next moves, and, at the same time, taking a breather and
working with people in the industry to explain what they just did.”
A Valero spokeswoman did not respond to a request
seeking comment. Chevron spokesman Braden Reddall said the company does not
comment on supply and trading matters.
The effect of the sanctions was immediate, as Gulf
Coast refiners scrambled to find alternative supplies of heavy crude.
Meanwhile, companies halted plans to sell petroleum products to Venezuela,
including diluents used to facilitate pipeline shipment in the country.
On Tuesday, one petroleum-loaded tanker bound
for the Latin American country did a U-turn in the Gulf of Mexico.