The Strategist

Reuters learns of Iran-Venezuela deal on mutual oil exports

09/27/2021 - 06:30

Venezuela has agreed with Iran to swap its heavy crude for Iranian condensate, Reuters has learned. This would allow Caracas to dilute its extra-heavy oil for export, but could violate US sanctions imposed on the two countries.

Venezuela has agreed to a deal to swap its heavy crude for Iranian condensate, an ultra-light oil used in refining and chemical industries, five people close to the talks told Reuters. They explained that the swap contract would provide Caracas with a steady supply of condensate, which is needed to dilute the extra-heavy oil for export purposes. In turn, Tehran will be able to sell Venezuelan heavy crude in Asia, Reuters wrote.

One of the interlocutors of the agency specified that the first phase of the agreement provides for the exchange of oil for six months, but then this period may be extended.

The first 1.9 million barrels of Venezuelan heavy crude under the new swap contract have already been shipped this week in the Port of Jose to an Iranian-owned tanker Felicity, data shows. At the same time, Reuters notes, the tanker was not noted in the September shipment schedule of Venezuelan oil company PDVSA. Three sources clarified that the shipment is a partial payment for 2 million barrels of Iranian condensate that arrived in Venezuela on September 23.

The oil ministries of the two countries and state-owned oil producers PDVSA (Venezuela) and NIOC (Iran) did not respond to the agency's requests. The US Treasury Department told the agency in an email that the deal may violate the US sanctions regime imposed on Caracas and Tehran.