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Second Fuel Tanker From Iran Arrives in Venezuela

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05/25/2020 | 05:16pm EDT

By Kejal Vyas and Benoit Faucon

A second tanker dispatched by Iran was welcomed Monday by Venezuelan naval frigates and helicopters as it entered national waters, a lifeline for embattled Venezuelan President Nicolás Maduro that reflects the closer ties being forged between Tehran and U.S. adversaries in Latin America.

The first of five tankers carrying 1.5 million barrels of gasoline, the Fortune, arrived in the predawn hours at El Palito, a refinery near Puerto Cabello, in defiance of U.S. sanctions that largely prohibit oil trading with the fuel-starved country.

A second vessel, the Forest, was also expected to dock at El Palito, where Venezuela is working to restart production, Venezuelan Oil Minister Tareck El Aissami said Monday in a speech. Three more tankers are set to arrive in the coming days

Mr. Maduro and his Iranian counterparts say they are working together to outlast the Trump administration, which this spring offered sanctions relief in return for Maduro handing over power to a transitional government. Venezuela's foreign minister rejected the plan.

"We are two rebel revolutionary peoples that are never going to kneel before North American imperialism," Mr. Maduro said in a televised address.

Venezuela has been left with little gasoline, diesel or propane fuel for cooking, the result of an economic meltdown exacerbated by mismanagement and rampant corruption at its once-vast network of refineries. While hunger spreads, soup kitchens can't operate. Farmers struggle to harvest their crops. And instead of combating the coronavirus, some doctors spend hours in line to pump gas into their cars.

Motorcyclists in Caracas often shut off their engines as they coast down the city's hills to save fuel. On a recent day, 36-year-old David Miranda packed a coffee mug and two sandwiches for himself before embarking on what would be a 21-hour wait in line for gasoline for his car. He came away with less than five gallons.

"Let's see if these famous little ships can make a difference," Mr. Miranda said, referring to the Iranian deliveries.

Gasoline has long been virtually free in Venezuela. But shortages in recent months have spawned an illegal market. Military officers routinely charge drivers more than $7 a gallon if they want to avoid lines at service stations, steep for a country where average citizens earn the equivalent of a few U.S. dollars a month.

Iran's shipments -- valued at about $45 million -- may only satisfy Venezuelan demand for a couple of weeks even if rationed, said Venezuelan oil economist Orlando Ochoa.

But Elias Matta, an opposition lawmaker who leads the Venezuelan congress's petroleum commission, said the fuel would fetch big returns for military men who control gas pumps if distributed at black-market prices. He estimated the street value at $477 million.

The other winner could be Cuba.

Venezuela's Information Ministry didn't immediately respond to calls and emails seeking comment on potential shipments to Cuba or the role of the armed forces in domestic gasoline distribution.

The arrival of the tankers to Venezuela prompted celebration from the regime in Cuba, which has long been the recipient of cut-rate Venezuelan oil in exchange for intelligence and military assistance.

"Long live solidarity among the peoples," Cuban President Miguel Díaz-Canel said Monday on his Twitter account. He thanked the Iranians for "breaking the unacceptable and criminal blockade," referring to U.S. sanctions on Venezuela and the U.S. embargo against Cuba.

As the Fortune moored at El Palito, an empty Cuban tanker, named the Petion, had just anchored nearby, according to satellite data from vessel tracker FleetMon.

"It's not a coincidence they are berthing next to each other," said Russ Dallen, who is a managing partner at the brokerage Caracas Capital Markets and closely follows Venezuela's oil industry. Mr. Dallen said Iran could now transfer some of the gasoline to Cuba or its deliveries to Venezuela could free up Venezuelan crude for delivery to the island.

While Venezuelan shipments to Cuba have fallen from their peak of 100,000 barrels a day in previous years, Caracas has still exported oil products to the island nation. In March, state oil giant Petróleos de Venezuela SA exported 797,000 barrels of mostly fuel, including diesel, to Cuba, according to customs and port documents reviewed by The Wall Street Journal. Some of the products came from the Paraguana refinery complex, which Iran is helping refurbish. Cubametales, the Cuban state-run company listed as the products' importer, didn't respond to a request for comment.

Havana has also separately sought Iran's support for its Venezuelan oil trade. Fifteen representatives from Cuba's Foreign Ministry met oil officials in Tehran in May 2019, seeking to buy three tankers to carry Venezuelan oil products, an Iranian official said.

Cuba's Foreign Ministry did not immediately respond to detailed emails seeking comment.

Short on available tankers, the Iranian official said his government advised the Cuban delegation to buy second-hand vessels in Greece. The Cubans took up the advice. Late last year, Caroil Transport Marine Ltd., a Cuban-owned and Cyprus-registered company, bought two vessels, the Giralt and the Esperanza, from Greek companies, according to shipping records. Caroil also took control of Pastorita, an oil-products tanker, from Singaporean-Danish operators, the records show.

Caroil didn't return an emailed request for comment, and no one responded at Trocana's office number.

The Cuban tanker docked at El Palito, the Petion, is listed as being owned by a Panamanian company named Trocana World Inc. and managed by Caroil.

But, according to Panama and Cyprus corporate documents, Guillermo Lopez-Callejas is Trocana's president and a Caroil director. He is the brother of Brigadier General Luis Alberto Rodríguez Lopez-Callejas, the head of the Cuban military's powerful business conglomerate and a former son-in-law of Raul Castro, the first secretary of the Cuba's Communist Party and Mr. Díaz-Canel's predecessor. The Lopez-Callejas brothers couldn't be reached.

"Iran is entering a new environment against Trump, giving him problems on multiple fronts," Mr. Ochoa said. "Iran is taking the bold move to show the world that they also have influence in an area the U.S. considers its backyard."

--Ginette Gonzalez in Caracas contributed to this article.

Write to Kejal Vyas at kejal.vyas@wsj.com and Benoit Faucon at benoit.faucon@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
LONDON BRENT OIL 1.56% 42.86 Delayed Quote.-35.11%
RANDOM LENGTH LUMBER?FUTURES (LBS) - CMG (ELECTRONIC)/C1 0.00% 533.4 End-of-day quote.32.99%
THE NEW HOME COMPANY INC. -4.24% 3.39 Delayed Quote.-24.03%
WORLD CO., LTD. -0.54% 1463 End-of-day quote.-45.63%
WTI 1.83% 40.28 Delayed Quote.-34.61%
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