March 24, 2020 / 8:01 PM / 10 days ago

UPDATE 2-Mexico's Libre Abordo says to take up to 15 mln bbl of Venezuelan oil

(Adds context on trade, PDVSA’s data)

By Ana Isabel Martinez and Marianna Parraga

MEXICO CITY, March 24 (Reuters) - Mexico’s Libre Abordo and a related company plan to take some 15 million barrels of Venezuelan crude as part of a first oil-for-food contract with President Nicolas Maduro’s government, the company told Reuters on Tuesday.

Since it received its first cargo of Venezuelan oil in late 2019 under the contract, Libre Abordo and a related firm Schlager Business Group have so far been allocated a total of 14.3 million barrels of crude and fuel in 13 cargoes, according to export data from state firm Petroleos de Venezuela (PDVSA).

“We will reach some 15 million barrels - it is not an exact figure - through the first contract signed with Petroleos de Venezuela,” Libre Abordo said in a written response to Reuters.

The importing/exporting firm, which had no prior experience in the energy sector, also said a new contract could be negotiated with Venezuela, depending on market conditions.

Libre Abordo signed a deal with PDVSA last year to supply corn and water trucks to the crisis-striken South American country in return for Venezuelan crude, the first such oil-for-food deal signed by Maduro’s administration since the imposition of U.S. sanctions on the state-run company last year.

The sanctions have deprived PDVSA of its primary market, the United States, and shrunk its portfolio of customers, starving Venezuela of hard currency at a time when its economy is in crisis.

Washington accuses Maduro of rigging his 2018 reelection. Maduro accuses the United States of seeking to control Venezuela’s vast oil reserves.

Major clients - including Russia’s Rosneft Trading and TNK Trading that were also sanctioned by Washington - have recently disappeared from PDVSA’s loading schedules.

The deal with Libre Abordo and Schlager has thrown a lifeline to Maduro amid a global oil demand contraction that is drying up spot sales of Latin America’s crudes and knocking down prices.

Libre Abordo said it had not yet completed delivery of the roughly 210,000 tons of white corn and 1,000 water trucks stipulated in the contract. The recent slump in crude prices increased the volumes of Venezuelan oil it intends to receive, it added.

Even with global oil benchmarks languishing at their lowest level in decades, the deal appeared to hand significant profits to the Mexican firms, according to Reuters calculations.

Venezuelan opposition economists have criticized the deal, which was struck before the slump in energy markets, saying the crude for the trade appeared well below market levels.

Libre Abordo, which is reselling the Venezuelan oil, has declined to disclose the names of the ultimate buyers. It said, however, that it is not selling the crude to international trading houses, big oil firms nor to Rosneft.

So far, only the first cargo received, on tanker Lion King, has discharged completely. A second tanker, Perfect, unloaded partially off Malaysia two weeks ago and it is now waiting near Singapore to deliver another parcel, according to Refinitiv Eikon data. (Reporting by Ana Isabel Martinez and Marianna Parraga; Editing by Dan Flynn, Sandra Maler, David Gregorio and Marguerita Choy)

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