Eni and Repsol could begin shipping Venezuelan oil to Europe as soon as next month to replace Russian crude, five people familiar with the matter say, resuming oil-for-debt swaps that were suspended two years ago when Washington tightened sanctions against Venezuela.
According to sources cited by Reuters, Eni and Repsol are not expected to ship a large volume of oil, indicating that it may only have a modest impact on global oil prices.
Sources also stated that the US State Department gave the green light to resume shipments in a letter. U.S. officials hope the Venezuelan crude will help Europe reduce its dependence on Russia and re-route some of Venezuela’s cargoes from China.
Several people say the oil companies can use the crude cargoes as a means to collect unpaid debts and late dividends from the Venezuelan state-run oil company PDVSA.
A key condition, one of the people said, was that the oil received “has to go to Europe. It cannot be resold elsewhere.”
In contrast to Venezuela’s current oil sales to China, Washington believes these cash-free transactions do not benefit PDVSA economically. Russia’s sanctions have not been accepted by China, and it has continued to buy Russian oil and gas despite the United States’ appeals.
Resale authorizations were received last month, but no details or restrictions were reported.