VENEZUELAN OIL SHIFTING TO ASIA

C O N F I D E N T I A L CARACAS 000104 SIPDIS ENERGY FOR CDAY AND ALOCKWOOD HQ SOUTHCOM ALSO FOR POLAD TREASURY FOR RJARPE COMMERCE FOR 4431/MAC/WH/JLAO E.O. 12958: DECL: 01/27/2019 TAGS: EPET EINV CH JA VE SUBJECT: VENEZUELAN OIL SHIFTING TO ASIA Classified By: Economic Counselor Darnall Steuart, for reasons 1.4 (b) and (d). ¶1. (C) A senior BP executive told EconCon and Petroleum Attache that PDVSA is shipping 100,000 b/d to China non-competitively (PDVSA continues to pay transportation costs). A senior Chevron executive noted that it has been common knowledge that this is PDVSA's strategic direction. At a separate meeting with the Japanese Ambassador, EMBOFFs learned that the Japanese believe China is receiving 300,000-350,000 b/d from Venezuela. ¶2. (C) The Japanese Ambassador also shared that Japan's JBIC is nearing finalization of a $1.5 billion loan, a 15-year deal which will be covered by exports of 30,000 b/d of Venezuela,s sweet Santa Barbara crude. PDVSA has rejected one pricing formula but is currently reviewing a second proposal from the Japanese. The Ambassador added that loan negotiations must be completed by the end of JBIC's fiscal year which he said occurs at the end of March. ¶3. (C) In a separate meeting with representatives from BNP Paribas, EconOff learned that PDVSA paid back the loan the bank brokered one month early (in December, vice the January maturity date). BNP Paribas is considering whether to lead another consortium to renew the facility. It depends in part on whether Asian banks are willing to put up money. The bank official shared that he heard that the Chinese have fronted another $3-4 billion for the Fondo Chino. Finally, BNP Paribas is seeing several of its competitors pulling out of Venezuela. Societe General is leaving in June, and Royal Bank of Scotland appears to be pulling out too. CAULFIELD