VENEZUELA’S CUSTOMER BASE
Since the first round of sanctions against Venezuela’s oil industry in 2019, its customer base has narrowed to just two countries: The US (where exports are occasionally allowed under a special waiver) and China, the only country with the financial and political muscle to flout Washington’s sanctions regime.
The key players here are the so-called teapot refiners, a collection of privately owned plants which cluster in Shandong province south of Beijing. They have attracted a reputation over the years for surviving by the skin of their teeth while competing with better connected, better capitalised state oil companies.
They’ve been the most important consumers of Venezuelan crude for years. Until about 2021, they were eager buyers of the country’s thick, viscous product – unattractive to many refiners, because it’s hard to process – due to its suitability for producing asphalt for road surfaces and roofing. Shandong’s refineries churn out about 40 per cent of the total, a good trade when China’s real estate boom was at its height.
When the property bubble burst in 2021, that trade slumped to barely more than half of where it was at its 2020 peak – but the teapot refiners found a new angle. By buying sanctioned oil from Venezuela, Iran and Russia at steep discounts to normal prices, they’ve managed to continue eking out the thinnest of margins.
Source: CNA
