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Venezuela prepares larger oil cargoes to export and targets India

Four sources and shipping data indicate that buyers and trading houses of Venezuelan oil chartered the very large crude carriers to export the South American nation?since the Caracas-Washington deal was signed. This move will boost deliveries to India.

The use of larger vessels that can hold up to 2,000,000 barrels each is expected to reduce transportation costs for buyers and traders, relieve a shortage in smaller tankers, and speed up deliveries beginning next month. This could help to drain the millions barrels stored at Venezuela faster.

The Nissos Kea and Nissos Kythnos, as well as the Arzanah, are at least three VLCCs that Vitol and Trafigura have chartered. They will be loading in March at Venezuela's largest oil terminal, Jose. This terminal is operated by PDVSA, a state-owned energy company, and it handles 70% of all crude exports. Sources said the tankers were bound for India.

According to LSEG Ship Tracking, another supertanker Olympic Lion was signaling Venezuela this week as its destination, with an expected arrival date of late March. The charterer wasn't immediately known.

Since January, most of Venezuela's crude oil exports have been transported to U.S. refining facilities in medium-sized tanks, such as Aframaxes and Panamaxes. These tankers can transport between 450,000 and 700,00 barrels of heavy oils each. According to vessel movement data, the oil was also transported on Suezmax vessels that?can transport up to one million barrels.

BIGGER CARGOES - LOWER COSTS

Larger cargoes may reduce the costs of trading houses, who have complained about prices that are around $15 below Brent for Venezuelan Merey heavy oil, agreed on last month, for initial purchases.

According to shipping data, two sources and the U.S. oil giant Chevron, Reliance Industries in India has purchased its first cargo of Venezuelan heavy crude since December 2023. This is the first time that heavy oil has been sold in six years. The Boscan crude shipment will be transported on the Ottoman Sincerity. Reliance has also purchased a 2-million barrel cargo from Vitol, for loading in March, and is looking to purchase directly from PDVSA.

Reliance didn't respond to questions outside of office hours. Vitol 'and Trafigura are trading houses that have been exporting Venezuelan Crude this year, as part of a deal worth $2 billion between the U.S.A. and Venezuela. They have also recently sold Venezuelan Heavy Crude cargoes to Indian Refiners including Indian Oil Corp, Bharat Petrol Corp, and HPCL Mittal Energy.

India was the third largest buyer of Venezuelan oil before Washington imposed sanctions on 2019. As a result of the lifting of a U.S. oil blockade, Venezuela's oil exports increased to 800,000 barrels a day in January. However, this rapid increase, from 500,000 barrels a day in December, has left millions in storage that were originally meant for U.S. or European buyers.

PDVSA and Vitol have not responded to our requests for comment. Trafigura refused to comment.

More Cargo to the U.S. Chevron, Phillips 66, Citgo Petroleum, and other U.S. refiners are preparing to increase Venezuelan oil processing in their?refineries. This is expected to also boost exports.

Two sources confirmed that Chevron, along with some U.S. refining companies, have hired dozens Aframaxes or Panamaxes. These vessels are mostly on time-charter agreements for Venezuela. This means they will only transport Venezuelan oil during the contract period.

Valero Phillips 66, and Citgo have not responded to requests for comment.

Two sources say that the move by trading houses to larger tankers will ease the search for medium-sized vessels departing from the Caribbean. Many companies have been struggling to find them.

Trafigura Vitol, and Chevron had been exporting oil from the OPEC nation under individual U.S. licences. But in late January the U.S. Treasury Department released a general license that allows oil exports.

It is anticipated that the new authorization will gradually expand the number of cargo destinations and buyers. Reporting by Marianna Pararaga, Shariq KHan, Arathy SOMASEKHAR, Georgina McARTNEY and Nicole Jao. Rod Nickel, Julia Symmes Cobb and Julia Symmes Cobb edited the story.

(source: Reuters)