Eni seeks US clearance to transfer Venezuelan oil

Market: Crude oil
03/09/20

Italy's Eni is seeking clearance from US sanctions authorities to transfer oil off of an impaired floating storage unit moored off Venezuela's coast.

The Nabarima floating storage and offloading unit (FSO) belongs to PetroSucre, a joint venture controlled by Venezuela's state-owned PdV. Eni holds a minority 26pc stake.

The vessel has been tethered at PetroSucre's Corocoro field in the Paria Gulf for 10 years. But since production was suspended last year, it has remained idle with a full cargo of around 1.2mn bl of medium-quality crude.

In recent days, workers on and off the FSO have described precarious conditions on board, including faulty equipment and internal flooding that caused the vessel to list. Repairs have since allowed the water to recede.

Eni said yesterday that the FSO has been stabilized and discounted any current risk of an oil spill.

In a follow-up statement today, Eni affirmed that a transfer would require US clearance.

"Eni is collaborating with PetroSucre to define and implement a program for unloading the oil cargo from Nabarima. This program implies the utilization of a dynamic positioning tanker and technical services. In order to be implemented, under USA sanctions this program requires a green light."

The US government has not commented on the situation. Neighboring Trinidad and Tobago has signaled concern over a possible spill and offered to provide technical assistance.

It is not clear if a ship-to-ship transfer would require a formal waiver from the US Treasury Department's sanctions enforcement arm, or explicit assurances that the operation, carried out on safety and environmental grounds, would not violate the US sanctions regime. Nor is it clear if Eni would retain title to the oil to be able to use or sell it, and how PetroSucre would be paid.

The Italian company already lifts Venezuelan crude in a credit-recovery mechanism permitted under the sanctions, although the US has indicated that it will end a related exception for diesel supply to Venezuela.

The Corocoro field used to be operated by ConocoPhillips before a wave of nationalizations in 2007, when the US independent pulled out.

Eni's other Venezuelan assets include a 50pc stake in the Perla offshore natural gas field with Spanish partner Repsol, and a 50pc stake in the Supermetanol methanol plant at the Jose complex. The firm also has a 40pc stake in the Junin 5 block in the Orinoco heavy oil belt, 19.5pc in the Petrolera Guiria oil exploration block and 40pc interests in the natural gas exploration areas Gulf of Paria West and Punta Pescador.

By Patricia Garip

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