China could be the near monopoly buyer of Venezuelan fuel oil after Beijing stepped up financial aid to cash-strapped Caracas, but it will be years before higher volumes of crude from the OPEC member begins flowing East.
Venezuela is struggling with multiple problems including a cash crunch caused by President Hugo Chavez's use of oil money to fund socialist projects, surplus fuel oil due to refinery outages and must seek alternative buyers for the crude it stopped shipping to Exxon Mobil Corp due to a legal row. In an unprecedented move to ease its cash squeeze, state-run PDVSA had asked for $1 billion upfront payment in a tender to sell eight fuel oil cargoes of 1.8 million barrels each. The tender was scrapped when potential buyers balked, but PDVSA is still holding talks with PetroChina, traders said. If a deal comes through, it would mean China soaking up nearly all the Venezuelan fuel oil exports to Asia and raise term imports by the world's second-largest oil consumer by a further 20 percent over a year, traders said. China, which is keen to secure long-term supplies to meet its surging demand, has more than doubled liftings of Venezuelan fuel oil, a heavy residue used to power ships and make road-paving bitumen, since fourth-quarter 2007. PetroChina, China's main proxy in energy deals with the Latin American nation also aims to raise crude oil imports from Venezuela by a quarter or more this year to at least 100,000 bpd. The trader ships about half its Venezuelan imports into China's booming domestic marine fuel market.
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