Sanctions imposed by Washington on Venezuelan state-run oil company Petroleos de Venezuela S A (PDVSA) are continuing to affect its US refining unit, Citgo Petroleum.

Citgo has already experienced difficulties obtaining crude oil and the credit required to purchase it (DC World News, 25 September 2017), but now it is finding it even harder to obtain the letters of credit (L/Cs) it needs.

Cash or L/C terms

Fewer oil providers are willing to sell cargoes to Citgo on open credit, instead requiring prepayment or L/Cs to supply its 749,000-barrel-per-day refining network, according to the Reuters news agency.

It says that two sources at Canadian suppliers said their companies are no longer allowed to trade with Citgo directly, and have begun selling cargoes through third parties to avoid the credit risk.

Reluctant banks

Banks meanwhile are increasingly reluctant to open L/Cs for transactions involving entities named as or connected to individuals or firms proscribed in the most recently introduced sanctions on Venezuela.

Earlier this year it emerged that a US company, PBF Energy, had made several unsuccessful attempts to find a bank willing to provide the L/C required to discharge Venezuelan oil from its tanker (DC World News, 4 September 2017).

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.