China’s CCPC said to take center stage in Iran, Venezuela oil trade: Reuters

An oil tanker is docked while oil is pumped into it at a PDVSA terminal in Venezuela. (Reuters)
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Updated 22 July 2021

China’s CCPC said to take center stage in Iran, Venezuela oil trade: Reuters

  • Many refineries worldwide, including state-run players in China, stopped buying crude from Iran and Venezuela after the US imposed sanctions, cutting millions of barrels per day from exports and billions of dollars from their income

LONDON: A Chinese logistics firm has emerged as a central player in the supply of sanctioned oil from Iran and Venezuela, even after it was blacklisted by Washington two years ago for handling Iranian crude, seven sources with knowledge of the deals told Reuters.
The more prominent role of China Concord Petroleum Co, also known as CCPC, and its expansion into trading with Venezuela, have not previously been reported and highlight the limitations of Washington’s system of restrictions, analysts say.
The details of the deals were described to Reuters by a range of individuals including one China-based source familiar with CCPC’s operations, Iranian officials and a source at Venezuela’s state-owned oil company PDVSA.
CCPC got involved in the Venezuelan oil trade this year through deals with small independent Chinese refineries known as teapots, according to monthly loading schedules, export schedules and invoices from April and May this year from PDVSA, as well as tanker tracking data and the PDVSA source.
The Hong Kong-registered firm has quickly become an important partner for Caracas, chartering ships in April and May carrying over 20 percent of Venezuela’s total oil exports in that period or nearly $445 million worth of crude, the PDVSA documents and tanker tracking data showed. CCPC did not charter any ships carrying Venezuelan oil in June, according to the documents.
Many refineries worldwide, including state-run players in China, stopped buying crude from Iran and Venezuela after the US imposed sanctions, cutting millions of barrels per day from exports and billions of dollars from their income.
Dependent on oil revenues to run their countries, Tehran and Caracas have since engaged in an elaborate game of cat-and-mouse with Washington to keep exporting crude, employing numerous techniques to avoid detection, including ship-to-ship transfers, shell companies and middlemen who operate outside the US financial sphere.
In the past year, CCPC has acquired at least 14 tankers to transport oil from Iran or Venezuela to China, two of the sources said.
A person reached by Reuters on CCPC’s registered phone number said she was unaware of any business activities of CCPC. She declined to be named. An email sent to an address for the company listed on the US Treasury’s website did not get a response.
PDVSA and Venezuela’s oil ministry did not respond to a request for comment. Iran’s oil ministry also declined to comment.
“China maintains normal, legitimate trades with Iran and Venezuela under the framework of international law that shall deserve respect and protection,” a spokesman for China’s foreign ministry said in response to questions about the role of Chinese companies in the trading of sanctioned oil.
“China strongly opposes unilateral sanctions and urges the United States to remove the ‘long-arm jurisdiction’ on companies and individuals.”
US officials, typically, do not move to interdict Iranian or Venezuelan oil shipments bought by Chinese or any international customers. But they can make it difficult for those involved in the trade to operate by barring US citizens and companies from dealing with them, making them pariahs for western banks.
In 2019, Washington added CCPC to a list of entities under sanctions for violating restrictions on handling and transacting Iranian oil. The company has not commented publicly on the sanctions and Reuters could not determine what impact the US blacklisting has had on CCPC.
CCPC supplies half a dozen Chinese teapot refineries with Iranian oil, three China-based sources said.
The sources declined to disclose the identities of these refineries or to be named due to the sensitivity of the matter. The documents reviewed by Reuters did not include the names of the refineries.
Iranian officials familiar with the matter confirmed that CCPC was a central player in Tehran’s oil trade with China.
China received a daily average of 557,000 barrels of Iranian crude between November and March, or roughly 5 percent of total imports by the world’s biggest importer, according to Refinitiv Oil Research, returning to levels last seen before former US President Donald Trump re-imposed sanctions on Iran in 2018.
China’s imports of Venezuelan crude and fuel averaged 324,000 barrels per day (bpd) in the past year to end-April, according to cargo-tracking specialist Vortexa Analytics, below pre-sanctions levels, but still more than 60 percent of Venezuela’s total oil exports.
The sanctions on Venezuela’s PDVSA were introduced in 2019 as part of a bid to topple that country’s socialist president, Nicolas Maduro.
The US Treasury declined to comment when asked about CCPC’s critical role in facilitating oil trade from Iran and Venezuela, but said that the agency pursues actions on an ongoing basis.
Julia Friedlander, a former senior sanctions official with the US Treasury, said the growing trade in blacklisted oil showed how those opposed were getting better at evasion.
“It shows there are limitations as to what US sanctions can do especially when you target multiple like-minded or selectively like-minded actors like oil traders. So, you incentivise these alternative axes of resilience,” said Friedlander, who is now a senior fellow at the Atlantic Council’s GeoEconomics Center.
The sanctions have battered the economies of Iran and Venezuela and dealt a serious blow to their tanker fleets, which are overstretched and in need of an overhaul, according to analysts and publicly available data on PDVSA’s fleet.
The 14 tankers acquired by CCPC have a capacity of around 28 million barrels of oil. At least one other tanker is also linked to CCPC, boosting their capacity to some 30 million barrels, the two sources said.
Iran exported more than 600,000 bpd of crude in June, a Reuters survey showed. That compares with a high of 2.8 million bpd in 2018, before sanctions were imposed, but up from 300,000 bpd in 2020, according to assessments based on tanker tracking data.


Saudi Arabia extends period to correct ownership details

Updated 27 September 2021

Saudi Arabia extends period to correct ownership details

RIYADH: Saudi Arabia’s Ministry of Commerce on Sunday extended the corrective period for violators of the Kingdom’s anti-concealment law until Feb. 16, 2022.

Failure to comply with the local law will result in penalties of up to SR5 million ($1.3 million) and jail term.

Status correction requests can be submitted electronically via mc.gov.sa.

The National Program for Combating Commercial Concealment, also known as Tasattur, the initiative aims to combat all types of commercial concealment by enforcing a number of measures and actions, including a gradual requirement for all business outlets to use electronic payment systems in their trade activities.

The program’s key mission is to regulate financial transactions and eliminate the illegal remittances.


Saudi mining portal received 4,073 license applications since launch

Updated 25 September 2021

Saudi mining portal received 4,073 license applications since launch

  • The Kingdom plans to launch a comprehensive geological survey to map the country’s mining potential

RIYADH: Saudi Arabia’s Ministry of Industry and Mineral Resources has received 4,073 applications through its online portal since it was launched earlier this year, it said in a statement on Saturday.

The ministry has issued 1,092 licenses to investors seeking opportunities in the Kingdom’s mining sector, and is processing a further 1,446, it said.

The sector is witnessing a rapid transformation and attracting investors from around the globe since the launch of a new mining law earlier this year.

According to geological surveys dating back 80 years, the Kingdom has an estimated reserve of untapped mining potential valued at $1.3 trillion.

Saudi Arabia’s mining industry has already attracted some major foreign investors. American industrial corporation Alcoa has a 25.1 percent stake in two companies, Ma’aden Bauxite and Alumina and Ma’aden Aluminum, as part of $10.8 billion joint venture with the Saudi Arabian Mining Co., Ma’aden, located in Ras Al-Khair Industrial City in the Eastern Province.

The Kingdom plans to launch a comprehensive geological survey to map the country’s mining potential.

The five-year program will conduct geophysical and geochemical surveys and create detailed mapping of more than 700,000 sq. km of the mineral-rich Arabian Shield area in Saudi Arabia.

The Vision 2030 reform plan identified the mining sector as a potential third pillar of the Kingdom’s industrial growth, alongside petroleum and petrochemicals. The country is investing SR14 billion to develop the sector.

About $45 billion in private and public sector investments have gone into the mining sector over the past decade, mainly in phosphate and aluminum production.

The Kingdom also plans to auction two major mining licenses in 2022 for commodities including gold, copper and zinc, as the Kingdom aims to triple the mining sector’s contribution to the national gross domestic product to SR240 billion ($64 billion) and double the number of jobs to 470,000 by 2030.


Egypt extends natural gas exploration auctions to end of September

Updated 25 September 2021

Egypt extends natural gas exploration auctions to end of September

  • Nine new exploration licence awards announced

CAIRO: Nine international natural gas exploration auctions that were announced in March have been extended until the end of September, said the Magdy Galal, chairman of the Egyptian Natural Gas Holding Company.

Galal also announced that nine new natural gas exploration agreements have been signed with international companies, bringing the total number to 44. The new exploration licenses will lead to investment of nearly $1 billion with signature grants amounting to $24 million, he said during the company’s general assembly headed by the Minister of Petroleum.

Last year witnessed eight new discoveries of natural gas, two discoveries in the Mediterranean and six in the Western Desert, adding an estimated 600 billion cubic feet of new reserves.

Four projects were implemented for the development and production of gas from the discovered fields with investments of more than $4 billion, and 15 new wells were placed on the gas production map, with an average daily production of 1.4 billion cubic feet of gas and more than 25,000 barrels of condensate.

The total average production of natural gas amounted to more than 6.8 billion cubic feet, covering the entire needs of the local market. The average daily local consumption of natural gas amounted to more than 6 billion cubic feet.

The electricity sector consumed the most gas, accounting for more than 60 percent of production, followed by the industrial sector with more than 22 percent and the petrochemical and gas derivatives industry with about 11 percent. Domestic home and vehicle use took and 6 percent.

Exports of natural gas were made to Jordan through pipelines, and liquefied natural gas has been exported to global markets with a total of 71 shipments from the Idku and Damietta facilities.

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China crypto crackdown reveals scale of digital yuan ambitions

Updated 25 September 2021

China crypto crackdown reveals scale of digital yuan ambitions

  • All crypto trading and mining deemed illegal in China
  • China's central bank digital currency could launch as soon as 2022

LONDON: If there’s one thing the Chinese Communist Party likes it is control.

A raft of edicts from President Xi Jinping this year have asserted the government’s control over ever larger swathes of the Chinese economy and the everyday life of Chinese people.

The financial cost of these measures is difficult to accurately gauge, but billions of dollars have been wiped off the value of tech companies, including Alibaba, Didi and Tencent, following a squeeze on their activities, including limits on how long children can spend playing online games.

There have been considerable financial costs too from China’s crypto crackdown, which intensified yesterday with a blanket ban on all crypto transactions and mining. Ten agencies, including the central bank, financial, securities and foreign exchange regulators, vowed to work together to root out “illegal” cryptocurrency activity, the first time the Beijing-based regulators have joined forces to explicitly ban all cryptocurrency-related activity.

That represents a major escalation from May this year, when China banned financial institutions and payment companies from providing services related to cryptocurrency transactions. It had issued similar bans in 2013 and 2017.

Despite an initial drop in the value of cryptocurrencies on Friday, they stabilized on Saturday and most analysts don’t see the measures having a long-term effect on the value of crypto assets.

“For the institutional crypto industry, it won’t change much as those who could leave already left and those who couldn’t have either closed or gone under the radar,” said George Zarya, CEO at digital asset prime brokerage and exchange BEQUANT. “The retail market most likely has gone under the radar and will continue to support market volumes.”

The biggest financial cost is to Chinese businesses involved in trading and mining cryptocurrencies.

Virtual currency mining had been big business in China before May, accounting for more than half the world’s crypto supply, but miners have been moving overseas.

“[China] will now lose around $6 billion worth of annual mining revenue, all of which will flow to the remaining global mining regions,” said Christopher Bendiksen, head of research at digital asset manager CoinShares, citing Kazakhstan, Russia and the United States as beneficiaries.

Crypto exchanges OKEx and Huobi, which originated in China but are now based overseas, are likely to be the worst affected since they still have some China users, analysts said. Tokens associated with the two exchanges plunged over 20 percent on Friday.

Despite all this disruption and loss of wealth, there is a major upside for China.

The Chinese government has repeatedly raised concerns that cryptocurrency speculation could disrupt the country’s economic and financial order, one of Beijing’s top priorities.

Most of all, cryptocurrencies are a threat to China’s sovereign digital yuan, which is at an advanced pilot stage. The People’s Bank of China, the country’s central bank, plans an official launch of the digital yuan as soon as 2022, following testing at the Winter Olympics.

Widespread use of the digital yuan would give Chinese policy makers greater visibility into how money flows around China’s economy.

This would help them track any illicit flows of funds, such as money laundering or terrorist financing, and it would also allow them to experiment by targeting monetary policy interventions on specific economic classes, regions or other groups.

However, by killing off independent cryptocurrencies, China closes off a huge area of financial innovation and risks reducing the dynamism of its economy in the future.


Under US sanctions, Iran and Venezuela strike oil export deal — Reuters

Updated 25 September 2021

Under US sanctions, Iran and Venezuela strike oil export deal — Reuters

  • Venezuela has agreed to swap its heavy oil for Iranian condensate that it can use to improve the quality of its tar-like crude

CARACAS/HOUSTON/WASHINGTON: Venezuela has agreed to a key contract to swap its heavy oil for Iranian condensate that it can use to improve the quality of its tar-like crude, with the first cargoes due this week, five people close to the deal said.
As the South American country seeks to boost its flagging oil exports in the face of US sanctions, according to the sources, the deal between state-run firms Petroleos de Venezuela (PDVSA) and National Iranian Oil Company (NIOC) deepens the cooperation between two of Washington’s foes.
One of the people said the swap agreement is planned to last for six months in its first phase, but could be extended. Reuters could not immediately determine other details of the mwpact.
The oil ministries of Venezuela and Iran, and state-run PDVSA and NIOC did not reply to requests for comment.
The deal could be a breach of US sanctions on both nations, according to a Treasury Department email to Reuters which cited US government orders that establish the punitive measures.
US sanctions programs not only forbid Americans from doing business with the oil sectors of Iran and Venezuela, but also threaten to impose “secondary sanctions” against any non-US person or entity that carries out transactions with either countries’ oil companies.
Secondary sanctions can carry a range of penalties against those targeted, including cutting off access to the US financial system, fines or the freezing of US assets.
Any “transactions with NIOC by non-US persons are generally subject to secondary sanctions,” the Treasury Department said in response to a question about the deal. It also said it “retains authority to impose sanctions on any person that is determined to operate in the oil sector of the Venezuelan economy,” but did not specifically address whether the current deal is a sanctions breach.
US sanctions are often applied at the discretion of the administration in power. Former US President Donald Trump’s government seized Iranian fuel cargoes https://www.reuters.com/article/us-usa-iran-cargo-idUSKCN25A2AH at sea bound for Venezuela for alleged sanction busting last year, but his successor Joe Biden has made no similar moves.
In Washington, a source familiar with the matter said the swap arrangement between Venezuela and Iran has been on the radar screens of US government officials as a likely sanctions violation in recent months and they want to see how far it will go in practical terms.
US officials are concerned, the source said, that Iranian diluent shipments could help provide President Nicolas Maduro with more of a financial lifeline as he negotiates with the Venezuelan opposition toward elections.
Sanctions on both nations have crimped their oil sales in recent years, spurring NIOC to support Venezuela — including through shipping services and fuel swaps — in allocating exports to Asia.
In a meeting at the UN General Assembly in New York on Wednesday, the foreign ministers of Venezuela and Iran publicly stated their commitment to stronger bilateral trade, despite US attempts to block it.
Trump’s tightening of sanctions contributed last year to a 38 percent fall in Venezuela’s oil exports — the backbone of its economy — to their lowest level in 77 years and curtailed sources of fuel imports, worsening gasoline shortages in the nation of some 30 million people.
A US Treasury spokesperson said the department was “concerned” about reports of oil deals between Venezuela and Iran, but had not verified details.
“We will continue to enforce both our Iran and Venezuela-related sanctions,” the spokesperson said. Treasury “has demonstrated its willingness” to blacklist entities who support Iranian attempts to evade US sanctions and who “further enable their destabilizing behavior around the world,” the official added.
The swap contract would provide PDVSA with a steady supply of condensate, which it needs to dilute output of extra heavy oil from the Orinoco Belt, its largest producing region, the people said. The bituminous crude requires mixing before it can be transported and exported.
In return, Iran will receive shipments of Venezuelan heavy oil that it can market in Asia, said the people, who declined to be identified as they were not authorized to speak publicly.

CARGOES THIS WEEK
PDVSA has boosted oil swaps to minimize cash payments since the US Treasury Department in 2019 blocked the company from using US dollars. Washington has also sanctioned foreign companies for receiving or shipping Venezuelan oil.
Since last year, PDVSA has imported two cargoes of Iranian condensate in one-off swap deals to meet specific needs for diluents, and it has also exchanged Venezuelan jet fuel for Iranian gasoline.
The new contract would help PDVSA secure a source of diluents, stabilizing exports of the Orinoco’s crude blends, while allowing its own lighter oil to be refined in Venezuela to produce badly needed motor fuel, three of the people said.
The first 1.9 million barrel cargo of Venezuela’s Merey heavy crude under the new swap set sail earlier this week from PDVSA’s Jose port on the very large crude carrier (VLCC) Felicity, owned and operated by National Iranian Tanker Co. (NITC), according to the three people and monitoring service TankerTrackers.com.
NITC, a unit of NIOC, did not reply to a request for comment.
The vessel was not included in PDVSA’s monthly port schedules for September, which lists planned imports and exports. However, TankerTrackers.com identified it while at Jose this month.
The Venezuelan crude shipment is a partial payment for a cargo of 2 million barrels of Iranian condensate that arrived in Venezuela on Thursday, according to the three sources and one of PDVSA’s port schedules.

LITTLE ENFORCEMENT
Last year, the previous Trump administration seized over 1 million barrels of Iranian fuel bound for Venezuela and blacklisted five tanker captains, as part of a “maximum pressure” strategy, but the United States has not interdicted recent Iranian supplies to Venezuela.
The US State Department declined to comment on the deal. A Treasury spokesperson did not respond to a Reuters question on how concerned the government might be that Iran-Venezuela deals would allow PDVSA to step up exports.
US government officials have insisted they do not plan to ease sanctions on Venezuela unless Maduro takes definitive steps toward free and fair elections.
Trump’s curbs on established companies doing business with PDVSA prompted the socialist-ruled nation to turn to swaps with Iran and other countries, while trading with a series of little-known customers.
PDVSA’s new customers and swaps have allowed it to keep exports stable around 650,000 barrels per day (bpd) this year, after they zigzagged in 2020.
However, a worsening shortage of diluents has recently limited oil exports, placing the Orinoco Belt production in an “emergency,” according to PDVSA documents from August and September related to its output status that were reviewed by Reuters.
PDVSA plans to mix the Iranian condensate with extra heavy oil to produce diluted crude oil, a grade demanded by Asian refiners that it has struggled to export since late 2019 when suppliers halted diluent shipments due to sanctions, the three sources said.