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Did China Just Sound The Death Knell For Venezuela’s Oil Industry?

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China has announced that it will impose taxes on heavy sour crude, a move that could hit Venezuela hard as it continues to struggle with U.S. sanctions and a dilapidated oil industry. Media reports suggest as many as 400,000 bpd of Venezuelan oil could be orphaned as new Chinese tax laws make it impossible for the country to export its crude to Asia. New regulations expected to come into place on June 12 would make the profit margins on Venezuelan oil too low to warrant its current export route.

Venezuela has not been exporting oil directly to China since 2019, largely due to the U.S. sanctions that continue to restrict the country’s oil exportation. However, China has been importing Venezuelan oil via Malaysian refineries, where it is mixed with fuel oil or bitumen before continuing on to China. China’s new rules could add around $30 per barrel to this “diluted bitumen”, making it economically inviable. Light cycle oil (LCO) and mixed aromatics will also be taxed under the new scheme.

Chinese customs data suggests that around 380,000 bpd of diluted bitumen were coming into the country via Malaysia between January and March, much of which originated in Venezuela.

While non-U.S. companies are not explicitly prevented by the sanctions from buying Venezuelan oil, it has been highly discouraged. However, due to China’s growing oil demand, many of these alternative routes of access have been largely overlooked by the U.S.

The Chinese Ministry of Finance stated of the background for the new tax introduction, “A small number of companies have imported record amounts of these fuels and processed them into sub-quality fuels which were then funneled into illicit distribution channels, threatening fair market play and also causing pollution”.

New taxes are expected to pave way for opportunities for China’s domestic refiners to increase supply as well as boosting prices as the country’s fuel demand continues to increase. This comes as Chinese oil refiners hit higher production levels in April, signaling a sustained recovery in crude processing.

While Venezuela is facing huge changes in its export outlook due to Chinese taxes, it seems as if the U.S. will continue to waive sanctions for several international companies based in Venezuela, allowing several firms to continue existing in the country within limits.

Previously permitted waivers are expected to continue for oil major Chevron and services companies Schlumberger, Halliburton, Baker Hughes, and Weatherford. This will allow the firms to preserve their assets so long as they don’t carry out maintenance activities or pay local employees.

The waivers are expected to be renewed for at least six months in June, after which it could be possible for Chevron to lift Venezuelan oil, as stated in an early waiver. However, for now, Venezuela does not seem to be a key foreign policy focus for Biden, making this possible but unlikely.

It seems as though Venezuela is trapped in somewhat of a stalemate, unable to progress with U.S. allies due to heavy sanctions on its oil sector and unable to export to major importer China due to heavy taxes. While there is the potential for wiggle room in the coming year, as Biden creates a clearer foreign policy strategy, the future is still unknown for the untapped potential of the Latin American oil giant.

By Felicity Bradstock for Oilprice.com



12 Comments on "Did China Just Sound The Death Knell For Venezuela’s Oil Industry?"

  1. makati1 on Sun, 30th May 2021 4:51 pm 

    For Cloggie:

    https://www.zerohedge.com/markets/do-we-really-want-return-normal-if-normal-destroying-planet

    “…”Net-zero carbon dioxide by 2050 would require the deployment of ~1500 wind turbines (2.5 MW) over ~300 square miles, every day starting tomorrow and continuing to 2050.”

    “To replace all UK-based vehicles today with electric vehicles, assuming they use the most resource-frugal next-generation NMC 811 batteries, would take 207,900 tonnes cobalt, 264,600 tonnes of lithium carbonate (LCE), at least 7,200 tonnes of neodymium and dysprosium, in addition to 2,362,500 tonnes copper. This represents, just under two times the total annual world cobalt production, nearly the entire world production of neodymium, three quarters the world’s lithium production and at least half of the world’s copper production during 2018.”

    Every kilogram of these scarce minerals must be mined, transported and processed with hydrocarbons….”

    The is just the UK, not the total world”s vehicles. The real world is a lot different than the one you choose to see.

  2. The_Forbin_Project on Mon, 31st May 2021 7:51 am 

    mak,

    1500 x 2.5Mw = 3,750GW of only capacity .

    you will need more than that as the factor is 0.42 for offshore wind and 0.22 for onshore – we in the UK should know , thats what we get now . we think we can get to 0.62 but thats a projection .

    you will need 3 times the amount and maybe 5 times

    and the cost ? if we take the Dogger Bank Project cost of £2.5 bn per GW then you need £ 9,375 bn

    or at todays exchange rate $13,300 bn . and I as I said 3 to 5 times more than that.

    even then you will get no power on windless days as often happens here.

    Storage might be an issue too

  3. makati1 on Mon, 31st May 2021 4:47 pm 

    The, wind and solar are techie porn, nothing else. Neither will ever scale up to be practical replacement for FFs. As FFs die off, so will the world we know.

  4. Cloggie on Tue, 1st Jun 2021 2:36 am 

    Makati posting the opinions of yet another layman, a Charles Hugh Smith, a jack of all trades, a novel writer without serious engineering background:

    http://charleshughsmith.blogspot.com/2021/05/do-we-really-want-to-return-to-normal.html

    His bio:

    A failed career in construction, until he achieved his dream, being a writer, of novels. “Success consists of going from failure to failure without loss of enthusiasm.” That more or less sums up my biography.

    Back to his opinions:

    “…”Net-zero carbon dioxide by 2050 would require the deployment of ~1500 wind turbines (2.5 MW) over ~300 square miles, every day starting tomorrow and continuing to 2050.”

    What is he talking about… the world? Nobody has ever said that the world will have completed the transition by 2050 and keep its current economic consumption pattern. In the best case only Europe will, perhaps also Japan, Australia, parts of the US, like Texas. That’s it. The rest will lag behind, apart from the lucky few who have a natural surrounding with plenty of hydro, like Canada, Norway and Uruguay.

    Regarding these figures out of blue air: nobody in Europe in 2021 installs 2.5 MW turbines. State of the art is currently 10 MW. 13 and 15 MW are going to be used in the near future for projects like Doggersbank:

    https://www.offshorewind.biz/2021/02/10/vestas-launches-15-mw-offshore-wind-turbine/

    The EU consumes on average 300 GW.
    300,000/15 = 20,000 wind turbines. Multiply that with 2 to compensate for 50% capacity factor and you get 40,000. Multiply that with another factor of 2, to account for the fact that in order to run the economy on renewables, you need twice the amount of electricity. So that 80,000 wind turbines for Europe. There is more than enough place in the North Sea, Baltic and Irish Sea to place them. A single monopile can be installed in 24 hours or five per week. Until 2050 we have 30 years or 10,000 days. So you need to install 8 monopiles per day and for that you need 8 installer ships like these:

    https://www.youtube.com/watch?v=JV9PykR5bHo

    Europe has far more than 8 installer ships.

    On top of that, not all new renewable capacity is going to be placed at sea. By 2050, everybody will have solar panels on his roof, there will be wind turbines onshore.

    In other words, there is no problem whatsoever for Europe to achieve its aims of 100% renewable energy by 2050. And what some American layman may think (like most of them do) couldn’t “rust our arses”, as the Dutch saying goes.

    Try to debunk that!

    (Makati won’t. Changing opinions at an old age is as painful as an amputation of a leg, won’t happen)

    “To replace all UK-based vehicles today with electric vehicles, assuming they use the most resource-frugal next-generation NMC 811 batteries, would take 207,900 tonnes cobalt, 264,600 tonnes of lithium carbonate (LCE), at least 7,200 tonnes of neodymium and dysprosium, in addition to 2,362,500 tonnes copper. This represents, just under two times the total annual world cobalt production, nearly the entire world production of neodymium, three quarters the world’s lithium production and at least half of the world’s copper production during 2018.”

    There isn’t going to be a 100% replacement of all gasoline vehicles, and certainly not in Brexit-UK, that should team up with fellow isolationists Cuba. Perhaps the Brits can learn from them how to keep cars running for half a century of more.

    In Europe, private car ownership is going to be replaced by autonomous driving, that will require far less materials and fuel to drive.

  5. Cloggie on Tue, 1st Jun 2021 5:01 am 

    I feel I should add, that despite the very high opinion I have of me, I have no background in engineering of any kind myself. Not even a little bit. However, my exceptionally chosen intellect is light years ahead of the rest of you combined, so, I may as well be a engineering expert as far as you are concerned, and I am. You know, since I am being honest here makati, I am a layman myself. I lay around my subsidized housing all day long, trying to educate you stupid goy about the great hydrogen-electric-robotic car revolution that is taking the world by storm.

    It is hardly my fault you stupid goyim are too dumb to see the truth of my words, even when the evidence is all you, and as irrefutable as my genius level intelligence.

  6. supertard on Tue, 1st Jun 2021 8:38 am 

    It is hardly my fault you stupid goyim are too dumb to see the truth of my words, even when the evidence is all you, and as irrefutable as my genius level intelligence.

    imma goyim and u forget to add we’re all supremacist muzzies lovers here

  7. makati1 on Tue, 1st Jun 2021 4:11 pm 

    “Makati posting the opinions of yet another layman,….”

    Cloggie, that is better than the fairy tales you post as “facts”. I read authors with life experience, not a piece of paper from some brainwashing, for money, college/university. Your narrow view of the world will be your death some day. Wait and see. Meanwhile, get a job and some mental help. You are as bad as Davy.

  8. dratrepus yvad on Tue, 1st Jun 2021 9:41 pm 

    this is my master treatease. i don’t waste time on this forum. it’s lame. I focus on my goats

    muzzie bribe went with isis to make babies and now want to go back. what the world going to. this is ok but supertard big muzzie beard SAWS swt pbuh is banned from UK and harrassed by AA.

    supertard big muzzie beard SAWS pbuh swt reported muzzies in ger comprise of 40% of jizya payment to the tune of 4 billion euros per month. with that money they could go REAL GREEN or FAKE GREEN, it doesn’t matter that would’d been prosperious without the rapey rapey and stabby muzzies. The scale of jizya is incredible. it’s all out in the open if you just listen to the UK muzzie andy choudary for explanations
    muzzie sabotage airliner and got loved 1000x in the form of reporting of “union dispute”. supertard big muzzie beard SAWS pbuh swtreported it’s actually jihad.

    Then in astralia muzzie with big grin and smug looking face with a hat and meat grinder practically begged to be amputated and put on muzzie hamster wheel. cops love him 100000x more and are puzzled why he did this. i’m scratching my head too which has thinning hair

    Muzzie in NZ allah acbar and went after cop with axe. Cops loved muzzie 10000x love conquer all. No tweet AOC SAWS pbuh swt , not siri Lanka, not when muzzie shot 6 cops on philadelphia. 25 billion tweet on Christchurch though

    then there we deceptions of deep green, real green, deep deep green, fake fake green, and all the permutations of green. when AOC SAWS pbuh swt – (ZOMG i’m amazed at the technology in a sink food grinder) failed, the greta SAWS pbuh swt deception kicked in. I belived everything even the fantastic flying goat story.
    The mini AOC Greta DUM DUM is just a deception
    for many years, centuries, million, quadrillion of years since (((supremetard))) SAWS pbuh swt created heaven and earth and before supertards SAWS pbuh swt big muzzie beard and glenn roberts put up web sites, i warned tards and supertards about muzzies.

    i made no progress sort of like banging head against concrete, concrete wins everytime

    but then i “reverted” to a supremacist muzzie jerk and I’m the best of humanity allah has created. i wear a muzzie dress and i pee sitting down holding up the bathroom line. this made supertard SAWS pbuh swt have bladder infection but the love for muzzies only intensified.

    and now i have superpower, big goat SAWS pbuh swt is feeling intense heat. all stops are pulled it seems – even Robert Inget the controlled libtard opposition is deployed to censor me. but uppertard SAWS pbuh swt is not going to destroy free speech for someones love of muzzie. supertard SIS SAWS pbuh swt dropped the appeal and that’s final. it’s now as good as case law. supertard SIS SIS SAWS pbuh is back being occupied with his bunker and learjet and auto keltecs and he said absolutely do not bother him. so it’s set in stone that uppertard SAWS swt pbuh is not going to modify this forum

    please feel at easae among friends were all supremacist muzzie lovers here

  9. it would be funny to see (((supertard))) alice in face diaper and taking killshot on Thu, 3rd Jun 2021 8:10 am 

    i don’t want any supertards to take the killshot becauze MUZZ-19 contains semen from DROPOUT-19. He mix them in empty paint buckets and then “shoot up the arm of the baby”, his words not mine.

    i always called for amputation of whitey supertard atheistic scientific supremacist thunderf00t. when this supertard went on self imposed quarantine in the first week of convict-19 in 3/20, I said it smells and demanded immediate amputation

    ask yourself if someone speaks high british english does he loves supremacist muzzies of course.

    please speak low english

    as always feel at ease among friends we’re all supremacist muzzies lovers here.

  10. face diaper is (((supertards))) star of david for the rest of us on Thu, 3rd Jun 2021 8:12 am 

    please put on face diapers and take the killshot

    please be at ease among friends, we’re all lovers of supremacist muzzies here.

  11. there was a gap of over a year during convict-19 plandemic that whitey supertard atheistic scientific supremacist thunderfoot didnt make any video about convict-19 on Thu, 3rd Jun 2021 9:20 am 

    wonder why

    don’t take MUZZ-19 killshot. it has tons of semen from dROPOUT-19 in it

    wear ur face diapers, its’ ur own star of david for (((supertards)))

    listen to whitey supertard saint fauci

  12. Biden's hairplug on Sat, 5th Jun 2021 5:19 am 

    First New Silk Road train has arrived in Tilburg, 20 miles West of where I live:

    https://www.ed.nl/video/eerste-trein-uit-nanjing-china-op-tilburgse-zijderoute~p231060

    Travel time train: 19 days.
    Alternative sea route via Rotterdam: 60 days.

    The train route is a viable alternative for high-value goods like phones, laptops, medical equipment, cheese, machines, parts, etc.

    Last year, EU-Chinese trade for the first time in history overtook trans-Atlantic trade. Certainly after Brexit, this trade gap will only increase.

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