Mexico sold 24 million barrels of Venezuelan oil to Asian companies

On April 1, the Trump administration announced the deployment of US Navy destroyers, AWAC surveillance aircraft, and on-ground special forces units to the Caribbean Sea in what has been reported as one of the largest operations in the region since the 1989 US invasion of Panama.

The operation’s stated goal was to intercept drug shipments allegedly originating in Venezuela, which Washington has targeted with crippling economic sanctions aimed at ousting President Nicolas Maduro.

However, Pentagon sources have criticized the move as a show of force intended to distract from the rising COVID-19 death toll in the United States.

The deployment came days after the US Justice Department unsealed “narco-terrorism” indictments against Maduro and other officials, including a $15 million award for the Venezuelan leader’s capture.

According to data from US agencies, only a small fraction of drug routes pass through Venezuela, with most cocaine exiting Colombia via the Pacific and entering US territory via Central America and Mexico.

Trump’s executive order followed reports that the US is investigating oil-for-food deals involving the Venezuelan government and Mexican companies.

Reuters revealed on Wednesday that the State Department, the Treasury Department and the US Embassy in Mexico are investigating two 2019 agreements with Mexico-based Libre Abordo, and an affiliated company, Schlager Business Group. US authorities have requested the Mexican government’s assistance in the case.

The deals saw Venezuelan state oil company PdVSA ship oil in exchange for shipments of corn and water trucks, respectively. The Mexican companies then resold the estimated 24 million barrels of oil to Asian companies.

Libre Abordo told Reuters that “the humanitarian aid contract signed with PdVSA fulfills all requirements to avoid any sanctions by the U.S. government.”

The US Treasury Department has imposed successive rounds of sanctions against Venezuela’s oil industry, starting with financial sanctions in August 2017. In January 2019, Washington imposed an oil embargo, later expanded to a blanket ban on all dealings with Venezuelan state entities.

Venezuela’s oil output, its main source of foreign currency, has plummeted from an average of 1.9 million barrels per day in 2017 to a low of just 796,000 in 2019.

US sanctions have caused severe fuel shortages in the Caribbean country, forcing Russian giant Rosneft to liquidate its Venezuela holdings and Indian companies to cease their oil-for-fuel swap deals.

The Venezuelan government is hoping to tackle the fuel scarcity by jump starting production at its refineries.

The El Palito refining unit in Carabobo State, with a capacity to process 80,000 crude barrels daily, was reactivated on April 15 following months of repair work.

Venezuela Analysis / ABC Flash Point News 2020.