China backs out of deal with Venezuelan refinery

Reuters:

PetroChina Co plans to drop Petroleos de Venezuela SA (PDVSA) as a partner in a planned $10 billion oil refinery and petrochemical project in southern China, said three sources familiar with the matter this week.

The company’s decision adds to state-owned PDVSA’s woes after the United States imposed sanctions on the company on Jan. 28 to undermine the rule of Venezuelan President Nicolas Maduro.

However, dropping the company was not a reaction to the U.S. sanctions but follows the deteriorating financial status of PDVSA over the past few years, said two of the sources, both executives with China National Petroleum Corp, the parent of PetroChina.

“There will be no role of PDVSA as an equity partner. At least we don’t see that possibility in the near future given the situation the country has been through in recent years,” said one of the executives, asking to remain unidentified because he is not authorized to speak to the media.

The move illustrates the fading relationship between Venezuela and China, which has given $50 billion to the South American country in the form of loans-for-oil agreements. China, the world’s largest oil importer, is now the second-biggest buyer of Venezuelan crude in Asia, taking in 16.63 million tonnes, or about 332,000 barrels per day (bpd), in 2018.
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It looks like China is cutting its losses on dealing with Venezuela and the state-owned oil company.  Russian companies are also cutting off their arrangements with the Venezuelan companies.  The US has told companies with ties to the Venezuelan oil business that had until April 28 to avoid US sanctions.

Maduro has also been blocked from shipping gold out of the country.