There’s a Malaysian twist here, just hold your horses.
Dateline 2021-05-21, Oilprice:
China has announced that it will impose taxes on heavy sour crude, a move that could hit Venezuela hard as it continues to struggle with U.S. sanctions and a dilapidated oil industry. Media reports suggest as many as 400,000 bpd of Venezuelan oil could be orphaned as new Chinese tax laws make it impossible for the country to export its crude to Asia. New regulations expected to come into place on June 12 would make the profit margins on Venezuelan oil too low to warrant its current export route.
Venezuela has not been exporting oil directly to China since 2019, largely due to the U.S. sanctions that continue to restrict the country’s oil exportation. However, China has been importing Venezuelan oil via Malaysian refineries, where it is mixed with fuel oil or bitumen before continuing on to China. China’s new rules could add around $30 per barrel to this “diluted bitumen”, making it economically inviable. Light cycle oil (LCO) and mixed aromatics will also be taxed under the new scheme.