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US has warned other governments, oil traders about violating PDVSA sanctions: State official

Washington — US officials are pressing foreign buyers of Venezuelan crude to halt trading with PDVSA, warning that oil purchases could run afoul of US sanctions, Elliott Abrams, the US State Department's special representative for Venezuela, said Friday during a press conference.

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"We do say 'look, the sanctions net is wide and you don't want to get caught in it and we would appreciate cooperation.' And in a very large number of cases, we get it," Abrams said. "We can see ships moving and we can see new contracts with new companies and when we do we talk to shippers or we talk to refiners or we talk to governments and we say you should not be doing that."

Abrams said that US officials have discussed cooperation with US efforts to halt oil, refined product and diluent trade with several shippers, refiners, oil traders and foreign governments. He declined to comment in detail on these talks, but said the US has gotten a "considerable amount of cooperation" from government and companies in India, Venezuela's top cash market for oil exports with US sanctions in place.

"There is selling, there is re-selling, there are oil traders involved in this and we have pretty decent information about this so we try to follow up and say 'don't do that,'" Abrams said. "We're seeing efforts and we're trying to shut them off."

But Abrams cautioned that there is little the US could do to curb trade between Venezuela and Russia.

He said the increase in oil, gasoline and diluent trade between Venezuela and Russia since the imposition of US sanctions was "predictable, given the relationship between the [Maduro] regime and Russia."

The US imposed sanctions on PDVSA, Venezuela's state-owned oil company, in January, effectively creating a US embargo on imports of Venezuelan crude. The sanctions are aimed at removing President Nicolas Maduro from power.

The US imported no crude oil from Venezuelan last week, the second week in a row of importing no crude from the South American nation as sanctions on PDVSA have firmly taken root, the Energy Information Administration reported Wednesday

While the US will prohibit dollar-based transactions with PDVSA next month, it has yet to impose secondary sanctions on PDVSA, which would explicitly prohibit trade between PDVSA and non-US companies.

According to S&P Global Platts Analytics, Venezuelan crude output averaged 750,000 b/d in March, down from 1.1 million b/d in February, because od widespread power outages. Production is expected to recover in the near term, but US sanctions will likely reduce Venezuela's crude output to 750,000 b/d by the end of this year, according to Platts Analytics.

-- Brian Scheid, brian.scheid@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com