Venezuela's PDVSA sends gasoline to Iran -trade-UPDATE 1

Trade the News

Tuesday February 01, 2011 10:35:13 PM GMT

* Traders see higher seasonal demand from Iran

* Venezuela had stopped shipments to Iran in Oct

(Adds background, comments from sources.)

By Luke Pachymuthu and Humeyra Pamuk

SINGAPORE/DUBAI, Jan 31 (Reuters) - Venezuelan state oil company PDVSA is sending two cargoes of gasoline to Iran, trade sources said on Monday, in a move that could help supply the Islamic Republic despite U.S.-led international sanctions. The cargoes are for February delivery, three trade sources told Reuters. PDVSA was not immediately available for comment.

"It is no surprise at all," one trade source said. "Venezuela, China -- countries like this, they don't care much about the sanctions," he said.

As a result of the sanctions, which came into effect in mid-2010, major oil companies have halted business with Iran, which is dependent on gasoline imports due to a lack of refining capacity.

Venezuela continued to send gasoline to Iran, shrugging off the sanctions, until October last year, when the South American OPEC member's energy minister said Iran no longer needed them.

"This is the time of the year when Iran's gasoline requirements would go higher," another trade source said.

The Islamic Republic, the world's fifth-largest crude exporter, is dependent on fuel imports due to its lack of refining capacity. It had imported 10-12 cargoes per month before the sanctions.

Its gasoline usage dropped after the government began implementing an unpopular four-fold rise in prices in December as part of a policy to phase out subsidies.

"We know that they had some stockpiles and they have boosted their production through using their petrochemical plants. But still they are short of gasoline," a third trade source said.

"It is getting very tight for them because of the sanctions, but they are still managing to import," he added.

(Reporting by Luke Pachymuthu and Humeyra Pamuk, Editing by Jane Baird)

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