As the South American country seeks to boost its declining oil exports in the face of US sanctions, sources say the agreement between state-owned companies Petroleos de Venezuela (PDVSA) and the National Iranian Oil Company (NIOC) deepens their cooperation.
One of the people said the swap deal is expected to last six months in its first phase, but could be extended.
The deal could constitute a violation of US sanctions against the two countries, according to an email from the Treasury Department to Reuters which cited US government orders establishing the punitive measures.
US sanctions programs not only prohibit Americans from doing business with the oil sectors of Iran and Venezuela, but also threaten to impose “secondary sanctions” against any non-US person or entity that trades with them.
Any “transaction with NIOC by non-US persons is generally subject to secondary sanctions,” the Treasury Department said in response to a question about the deal.
He also said he “retains the power to impose sanctions on anyone determined to operate in the petroleum sector of the Venezuelan economy”, but did not specifically say whether the current agreement violated sanctions.
The government of former US president Donald Trump seized shipments of Iranian fuel destined for Venezuela last year for alleged sanctions violations, but his successor Joe Biden has taken no similar action.
In Washington, a source familiar with the matter said the Venezuela-Iran swap deal has been on the radar screens of US government officials as a likely violation of sanctions in recent months and they want to see how far it will work in practical terms.
US officials fear, the source said, that Iranian thinner shipments could help provide President Nicolas Maduro with a financial lifeline as he negotiates with the Venezuelan opposition ahead of the election.
At a meeting at the United Nations General Assembly in New York on Wednesday, the foreign ministers of Venezuela and Iran publicly declared their commitment to boost bilateral trade, despite US attempts to block it.
A spokesman for the US Treasury said the department was “concerned” about reports of oil deals between Venezuela and Iran, but had not verified details.
“We will continue to apply our sanctions related to Iran and Venezuela,” the spokesperson said.
The Treasury “has demonstrated its willingness” to blacklist entities which support Iranian attempts to evade US sanctions and which “further allow their destabilizing behavior in the world,” the official added.
The swap deal would provide PDVSA with a constant supply of condensate, which it needs to dilute extra-heavy oil production in the Orinoco Belt, its largest producing region, residents said. Crude bituminous requires mixing before it can be transported and exported.
In return, Iran will receive shipments of Venezuelan heavy oil that it can market in Asia, said the people, who declined to be identified because they were not authorized to speak publicly.
The new contract would help PDVSA secure a source of diluents, stabilizing exports of Orinoco crude blends, while allowing its own lighter oil to be refined in Venezuela to produce much-needed fuel, said three people.
The first shipment of 1.9 million barrels of Venezuelan heavy crude Merey under the new trade set sail earlier from the port of PDVSA in Jose on the national-owned and operated a very large crude carrier (VLCC) of National Iranian Tanker Co (NITC), according to the three-person and monitoring service tankertrackers.com.
The shipment of Venezuelan crude is a partial payment for a shipment of two million barrels of Iranian condensate that arrived in Venezuela on Thursday, according to the three sources and one of PDVSA’s port schedules.