Venezuela is still sending oil to China despite stifling U.S. sanctions, Bloomberg has reported, citing shipping data from Kpler.

As of this Monday, the data suggested, there were 3.3 million barrels of Venezuelan crude waiting to unload at Chinese ports and another 5 million barrels en route to the port of Qingdao.

“Most of the oil reaches China after a simple ship-to-ship transfer, often with both transponders online,” TankerTrackers.com co-founder Samir Madani told Oilprice.com. The STS, Madani said, most often took place in the Strait of Malacca or the South China Sea, in the most open fashion as the participants believed they had not been detected loading the cargo in Venezuela.

Asian refiners, and Chinese refiners specifically, have a taste for Venezuelan oil, which is heavy and sour, and their refineries are equipped for processing such grades. But now there is also a jump in demand for bitumen as the country reopens after the lockdowns. Heavy crude contains more superheavy fractions that yield bitumen when processed.

“Bitumen margins have been quite strong since late last year and as China accelerates resumption of economy, demand is very much supported,” one analyst with Energy Aspects told Bloomberg.

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In fact, China never stopped buying Venezuelan oil despite tightening sanctions. Most recently, these targeted tanker owners and companies that use them to transport crude oil, with plans to blacklist any vessel that has called at a Venezuelan port over the past 12 months.

Yet even before this latest threat from the U.S. administration, ship-to-ship transfers were a frequently used way to disguise the origin of oil cargos, and China has been using them a lot to disguise Iranian and Venezuelan shipments destined for Malaysia before they are routed to China.

A recent analysis by Reuters revealed that the STS approach was systematic. Last year, the average number of Venezuelan oil barrels that China imported came in at 283,000 bpd, 24 percent more than the official number reported by Chinese authorities.

Meanwhile, however, overall Venezuelan oil exports continue to fall. Over the first half of June they averaged 325,000 bpd, according to a Reuters report, down from 452,000 bpd in May. This is the lowest rate of Venezuelan oil exports in more than seven decades.

By Irina Slav for Oilprice.com

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