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(Bloomberg) — One of China’s largest regular buyers of Venezuelan crude is making bids for Canadian cargoes as a replacement, after US intervention in the Latin American country upended global flows and lifted prices.
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Shandong Chambroad Petrochemicals Co. has offered to buy Canadian Cold Lake oil at a discount of about $5 a barrel to ICE Brent on a delivered basis to China for May, according to people familiar with the deal, who asked not to be named as they are not authorized to speak to the media.
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No deal has yet been agreed. Recent deals of the grade were closed with Chinese buyers at discounts of about $4 a barrel to ICE Brent, traders said.
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Chambroad did not respond to an email seeking comment and calls to the company were unanswered.
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The private refiner’s bid comes as China explores alternatives to Venezuela’s Merey, a heavy crude that previously traded at deep discounts due to US sanctions. Since Trump’s blockade and the seizure of dark-fleet tankers involved in ferrying the country’s oil, China-bound flows have dwindled, with Western traders moving shipments to Europe and the Caribbean. They have also offered supplies to Asia at much narrower discounts.
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Prior to the US action, when Venezuelan oil was sold via a clandestine network, barrels were offered to Chinese refiners at discounts as wide as $15 a barrel.
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Aside from privately-owned Chambroad, other regular Chinese buyers of Venezuela crude including Shandong Dongming Petroleum & Chemical Group and Sinochem Hongrun Petrochemical Co.
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