The Trump administration used its final days in office to introduce a slew of new sanctions on a network accused of brokering the sale of prohibited Venezuelan crude oil to buyers in Asia.

Three individuals, 14 entities and six vessels were added to the list of sanctioned entities maintained by the Office of Foreign Assets Control (OFAC), a formidable authority that sits within the US Department of the Treasury.

The Treasury alleges that all of these players have ties to a vast Mexico-based network, which the US claims has been helping Venezuela’s Nicolás Maduro government bypass stringent sanctions placed on its state-owned fuel company, Petroleos de Venezuela (PdVSA), since 2019.

According to the US, the South American country has continued to sell “hundreds of millions of dollars” of PdVSA crude globally through the scheme.

“Those facilitating the illegitimate Maduro regime’s attempts to circumvent United States sanctions contribute to the corruption that consumes Venezuela,” said then Treasury secretary Steven Mnuchin last week, prior to President Joe Biden taking the oath of office.

According to the US Treasury, the “principal actors” designated in last week’s announcement include two middlemen who co-ordinated the purchase and sale of Venezuelan crude: Alessandro Bazzoni and Francisco Javier D’Agostino Casado.

Two European-based trading companies – Geneva-based Swissoil Trading and Malta-listed Elemento Limited – were also said to have been central to the operation.

Elemento is accused of purchasing oil from PdVSA and then reselling it to third-party customers, with the US claiming that between July 2019 and June 2020 the firm lifted and brokered the sale of at least five shipments of PdVSA crude.

For its part, Swissoil is said to have assisted in the sale and shipping of Venezuelan crude to buyers in Asia. “Swissoil often acted as the consignee, or the entity financially responsible for the receipt of a shipment, for oil shipments brokered by Elemento. Swissoil was also the recipient of at least one shipment of Venezuelan oil in Asia,” the US Treasury says.


Attempted evasion

Having recognised the leader of Venzuela’s opposition-led National Assembly Juan Guaidó as interim president in early 2019, the White House began turning up the pressure on the Maduro government by targeting its primary cash cow, the PdVSA.

The Trump administration blocked any oil sales from Venezuela to the US in early 2019, then rolled out sanctions on two units of PdVSA’s main trading partner, Russian firm Rosneft, before imposing restrictions on vessels involved in the transportation of Venezuelan oil.

Despite this ramping up of pressure, suspicions had been growing that the PdVSA had been working to sell oil globally in defiance of these sanctions.

Such allegations became the focal point of a probe launched by the US in 2019 into Elemento and Swissoil, as well as Mexican firms Libre Abordo and Schlager Business Group.

Then in June last year, OFAC claimed that it had discovered the latter two firms – alongside a number of individuals, mainly Mexican citizens – were part of a broad Mexico-based “secret network”.

The US Treasury accused Venezuela of enlisting a network of facilitators to “orchestrate opaque schemes”, with the aim of brokering the re-sale of over 30 million barrels of Venezuelan-origin crude oil.

Two key middlemen, Mexican citizen Joaquin Leal Jimenez and Alex Nain Saab Moran, an alleged key deal maker for Maduro, are said to have run one particular scheme that saw Venezuela and the designated people and entities take advantage of the US oil-for-food programme.

Under the guise of the initiative, Libre Abordo and Schlager claimed to have struck contracts with the Venezuelan government to deliver corn and water tanker trucks in exchange for 30 million barrels of crude oil.

The US says Libre Abordo and Schlager failed to live up to their side of the deal, however, and then began working to re-sell Venezuelan crude in Asia.

According to the US Treasury, Libre Abordo “largely replicated Rosneft Trading’s operations, including by marketing Venezuelan oil to the same buyers in Asia, and using virtually the same routes and shipment processes”.

Meanwhile, Schlager Business Group, a Mexico City-based affiliate of Libre Abordo, assisted the scheme by taking charge of the chartering contracts needed to lift PdVSA crude oil.

The two companies’ part in the operation saw their share of PdVSA exports ramp up dramatically, from 3% in January 2020, to 40% in April, the Treasury says.

Nevertheless, while these various companies and facilitators – including Leal and Saab – were put on the OFAC sanctions list in June 2020, the Treasury says a reshuffle in personnel saw the scheme continue.

Bazzoni – who has now been added to the OFAC list – took over the core co-ordinating role in their stead, with the Italian keeping the scheme going by brokering the re-sale of Venezuelan crude oil from PdVSA and charter vessels willing to go to the country to load oil.

He was aided by D’Agostino, another core facilitator of the network and a dual Spanish-Venezuelan citizen.


No escape for vessels

Six vessels and their registered companies – based in Ukraine, Russia and Venezuela – were included in last week’s sanctions announcement from the US Treasury for their part in “recently” lifting Venezuelan oil.

One of the six sanctioned vessels as identified by the Treasury is Liberian-flagged crude oil tanker Baliar, which MarineTraffic data shows has been renamed Legacy and now sails under the Cameroon flag.

The other five vessels are Cameroon-flagged tankers Balita, Domani and Freedom, and Russian-flagged tankers Maksim Gorky and Sierra.

Ship tracking information from MarineTraffic shows that, as of press time, Balita is forecast to arrive in Shanghai port in the coming days, Freedom is en route from Malaysia to the Suez Canal, and Domani was reported to be off the coast of Sri Lanka last week.

Sierra is off the coast of Panama, and Maksim Gorky is out of range – although its last reported position was off the coast of Singapore in December.

OFAC has previously blacklisted vessels that it deems have helped import oil into, or export the commodity from, Venezuela.

These orders have generally targeted ships involved in the prohibited transfer of oil from Venezuela to Cuba.

The Latin American country, bereft of oil processing facilities of its own, has sought to import refined petroleum from other nations – including Iran. In June last year, GTR reported that 121 vessels, including tankers, bunkering vessels and container ships, were added to OFAC’s list, due to their links to the IRISL Group, an Iranian shipping lines company.


Biden and Venezuela

According to a report from France 24, President Maduro has said he is willing to “turn the page” and has called on Biden to help rebuild the relationship between the two nations.

That appears a distant prospect, however, with new US secretary of state Antony Blinken referring to Maduro as a “brutal dictator” during a Senate hearing in January.

Relations between the US and Venezuela have been tepid at best for the best part of 15 years, with Barack Obama – to whom Biden served as vice-president – having also imposed sanctions against Venezuelan individuals for human rights abuses, corruption, and anti-democratic actions.

Pedro Freyre, chair of the international practice at law firm Akerman, says that Biden is unlikely to push for a rollback on Venezuela sanctions in the near-term.

But, he tells GTR, the new US government is likely to approach the Venezuela relationship with “less drama and bluster” than the Trump administration, and will likely try to engage in dialogue with the Maduro government.

Biden is set to come under increasing pressure to alleviate the humanitarian situation in Venezuela, which has seen 5 million people exit the country in recent years.

Reuters reported last month that aid groups – as well as US oil companies – were planning to press the new president to allow crude-for-diesel swaps, for instance, with the Trump administration having banned companies from sending Venezuela diesel in exchange for crude.