Marianna Pararaga and Deisy Puitrago

HOUSTON/CARACAS – Venezuelan petrochemicals have been brought to the United States by joint ventures formed between the state-owned chemical company Pequiven, and other foreign partners. This is despite Washington’s attempts to restrict trade with the OPEC oil producer.

Two cargoes worth methanol have left Houston ports this October, amid an increase in South American countries’ global sales.

These shipments are a unique and unknown effort of Venezuela to increase revenues in spite of U.S. sanctions against its oil industry, which have reduced Venezuela’s vital crude oil exports to their lowest level for 77 years.

U.S. sanctions are designed to remove President Nicolas Maduro from power, who Washington regards as fraudulent. Maduro maintains that 2018’s vote was fair and free.

After a few years of suspension, Mitsubishi Corp will resume exports to the United States of methanol from its Venezuelan joint venture Metor in 2021. Metor’s shareholders include Petroquimica de Venezuela, or Pequiven.

Refinitiv Eikon data revealed that the main oil port in Venezuela of Jose was the origin point for one of two methanol shipment shipments. However, both ships sailed from Venezuela.

The names of buyers and sellers in the two methanol cargoes arriving in Houston were removed from the U.S. Customs Data, which was provided by IHSMarkit to Reuters.

U.S. Treasury Department and U.S. Customs and Border Protection agency did not comment on the shipment.

Pequiven didn’t respond to Reuters inquiries for comment. However, it stated that Metor exported methanol in July to Europe, South America, and Asia.

WIDENING SANCTIONS

In 2019, the United States issued an executive order that subjected Venezuela’s oil industry to sanctions. This was used to blacklist PDVSA, its subsidiary companies and state oil company PDVSA. An order later extended the sanctions to companies that were owned or controlled government entities. Pequiven, Venezuela’s state-run petrochemical operation were not 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.

Pilarski explained that Pequiven could have been the original originator and any shipment to America would be considered an indirect receipt. That would constitute a violation even if Pequiven had never received payment.

According to him, companies that export Venezuelan methanol into the United States can apply to Treasury for a license.

Methanol, which is produced from Venezuela, is used in many everyday products, including gasoline and paints. According to IHSMarkit, U.S. exports outnumbered imports over the past few years.

The tanker PVT Aurora emitted approximately 16.900 metric tons of Venezuelan methane in Texas between Oct. 7-11. Refinitiv Eikon data shows that a portion of this cargo was handled at the Deer Park chemical terminal by Intercontinental Terminals Company (ITC).

The ITC spokesperson did not respond when asked.

This vessel, flagged Vietnam, was taken to the Jose port. It serves PDVSA as well as Pequiven.

EXPORTS CAN BE RATED UP

The Eikon data shows that a second, more than 20,000-tonne shipment of Venezuelan methanol was sent in the same route as in November aboard tanker Sakura Advance. Some of this cargo discharged in Houston, Texas, on Nov. 11-13. Another parcel arrived at South Louisiana Port days later.

Italy’s Eni, a 50-50 partnership with Pequiven, also makes methanol for Venezuela using Supermetanol.

According to an Eni spokesperson, “Eni’s affiliate has a stake in Venezuela’s methanol plants and is responsible for marketing its equity production under all relevant laws and regulations relating to economic and financial sanction, trade embargoes, and similar laws.”

Pequiven, PDVSA and the Associated Petroleum Companies have increased their exports of oil byproducts and petrochemicals. These products aren’t as important as crude but were not a priority until recent times. This was evident from an internal analysis.

In recent years, PDVSA has seen its exports cut by U.S. sanctions.

However, oil products and petrochemical shipments have increased, with a rise in exports, such as methanol and sulfur pastilles. Three people who were familiar with the subject confirmed this, but they declined to identify themselves as they weren’t authorized to talk publicly.

The low prices that buyers were offered for Venezuelan petrochemicals have helped boost exports. This has led to income which was partially used by Pequiven’s joint ventures in order to reopen or revamp units.

PDVSA and Pequiven had a more consistent supply of natural gas, which helped to boost the petrochemical industry.

According to one person, “The plants have entered recovery mode as the proceeds of sales allow.” Even the United States has opened its doors for Venezuelan methanol.

According to internal data, PDVSA/Pequiven have exported 1.75 Million tonnes of petrochemicals & byproducts from January through October. This puts the trade in line to more than double 2020’s 1.03M tonnes export.

According to data from the three individuals, the methanol shipment volumes for this year were between 20,000 and 60.000 metric tonnes each month. Most of them went to China, Japan, Spain and Japan.

Venezuelan Methanol prices vary depending on where they are shipped. One person said that they received $130 to $140 per tonnes for delivery in November and December. This is lower than the U.S. spot price of $450-690 per tonne. Experts agree that prices can vary depending on the quality of delivery, including freight rates.

A tonne benchmark Venezuelan Merey crude oil for November delivery was sold at a price of $395.