Iran boosts crude supply to Venezuela for refining, freeing up exportable oil

CARACAS: Iran is increasing supplies of a key crude grade that Venezuela is using to boost its aging refineries’ productivity and free domestic oil for exports, documents seen by Reuters on Tuesday showed.

The two US-sanctioned countries have strengthened energy cooperation in recent years, swapping Venezuelan heavy oil and other commodities for Iranian gasoline, condensate, refinery parts and technical assistance.

The exchange has grown since May when state companies form both nations struck a contract to revamp Venezuela’s El Palito refinery, after earlier work at the country’s largest facility.

Venezuela’s state-run oil company PDVSA is set to receive 4 million barrels of Iranian Heavy crude this month, an increase from 1.07 million barrels imported in June and a volume similar to May, when a supply contract with Iranian state firm Naftiran Intertrade Co (NICO) was signed, one of the documents showed.

The cargoes are expected to arrive in Venezuela’s Jose port by the end of the month on Iran-flagged supertankers Herby and Serena, according to the document. The vessels’ transponders were last recorded passing near Fujairah, in the United Arab Emirates last month, according to Refinitiv Eikon data.

PDVSA and Venezuela’s oil ministry did not immediately reply to requests for comment.

PDVSA is refining the Iranian crude at facilities craving suitable crude to increase output of motor fuels. The supply also is allowing the state-run company to free its lightest grades for blending and exporting.

The Middle Eastern oil is expected to help PDVSA recover stocks of its flagship exportable grade, Merey, the Venezuelan crude preferred by Asian refiners, after falling to about 1 million barrels in early July, according to the documents.

PDVSA also has continued importing about 2 million barrels per month of Iranian condensate, helping boost output of exportable blends.