Oh _heeere'_s a sick story of he-said-she-said in international, oil-related export disputes aaaand wrapped in "crypto" meaning actually just tether:

In late November 2023, on a boat off Abu Dhabi, a top executive at Poland’s biggest state-backed energy group turned to a young trader he knew and gave him a deceptively simple instruction: “Go out and get me Venezuelan oil.”

So far, so good. Venezuela was in dire straits, oil was expensive but fungible, Russian next-door non-delivery/Ukraine kerfuffle meant getting global oil on the cheap = AMAZING. The conversations between the executive and an oil trader were epic,

...involving hundreds of millions of dollars of missing money, vast sums of cryptocurrency swapped on USB sticks in Caracas restaurants — and ultimately very little Venezuelan oil.

Of course, because we all know that shady "cryptocurrency" is transacted with over USB sticks on site.

An FT investigation — based on internal company documents, shipping data, blockchain analysis, court filings and extensive interviews with the people involved — reveals how a race for crude oil and cryptocurrency has become one of Poland’s biggest-ever corporate scandals.  The saga opens a window on a shadowy corner of the oil market, where little-known intermediaries and cryptocurrency replace conventional buyers and payment channels, offering traders outsized profits but exposing them to serious risk.

And after US sanctions having made it difficult for internationals to acquire/pay for Venezuelan crude, in October 2023 there was a new window opened:

In October 2023, Washington eased oil sanctions on Venezuela for six months in the hopes that the country’s revolutionary socialist leader, Nicolás Maduro, would allow democratic elections. But tough US restrictions originally imposed in 2019 had driven away buyers and choked conventional payment channels, leaving Venezuelan crude cheap — but difficult to buy.

"For bold oil traders, the six-month window of sanctions relief was an opportunity to make serious profits."

The state oil company wanted advance payment in USDT, which you'd expect be a major problem for a large, European, follow-the-rules state energy company. Alas, not:

Ultimately, OTS jumped in with both feet. A few days after the boat party, on November 29 2023, it signed a contract to buy about 6mn barrels of PDVSA’s main heavy blend, Merey 16, from Tse’s company Hannon for $345mn.

Two-thirds advance payment, and a few days later the $230 mil were off.

Now that the company had $230mn of Orlen’s money, along with $15mn of Hannon’s own, Tse had to get the oil from PDVSA, and the USDT to pay for it.

And then another middleman, Italian Vitonicola Mariano of Lexcor Energy, living in Russia. Then, get the USDT:

Tse turned to getting his hands on USDT to pay for the oil. He first used a Dubai financial-services company he had dealt with previously, which provided 80mn USDT for a commission of some $400,000. That left another $160mn or so to convert.

(0.5% spread for USDT seems expensive but maybe in this size life is different.)

Next: Gold Mar, another dubai trading firm, which "Hannon sent Gold Mar $30mn in December 2023, expecting it to be converted into USDT and then “onward remittance to PDVSA by Lexcor” to secure the crude. But the money would never reach PDVSA."

While Orlen’s money moved through Dubai, three supertankers chartered by the Polish energy group were on their way to Venezuela. They reached Venezuelan waters by mid-December, according to shipping records, anchoring near the José terminal, the country’s main crude-export hub. Awad was expecting Tse to deliver the promised 6mn barrels of oil in three stages by a final deadline of December 19. But week after week, well beyond the deadline, the three tankers waited, empty, as Orlen accumulated demurrage — charges payable when a chartered vessel is held beyond the agreed period.

Confused yet?

Here's a flow chart:

And when neither tethers arrived nor oil was loaded...

By January, with just three months left of the sanctions window, Tse decided to take things into his own hands. With a colleague, he headed to Venezuela. They stayed at the luxury Cayena Hotel and the JW Marriott in Caracas. They brought USB sticks containing huge sums of USDT, and hired an armoured car and bodyguards “for fear of kidnapping” in the country.

Caracas offered no shortage of brokers claiming access to PDVSA, replacing established companies that had left before the sanctions were temporarily lifted. The resulting web of intermediaries and cryptocurrency deals had triggered the government’s PDVSA-Cripto corruption investigation, which burst into public view with arrests in March 2023. As the pair arrived in Caracas, the investigation was tearing through the local oil industry. Brokers would be here today, and gone tomorrow. On January 5 2024, Tse said his colleague met a man called José Castillo of an agency called Synergy at a hotel perched above Caracas on the slopes of El Ávila. According to Tse, Castillo said he could secure the oil it needed and so Tse’s colleague handed him a USB stick containing the digital keys to 60mn USDT.

Amazing. And fucking oops. Another few rounds of this and

With the fuel-oil contract signed and more USDT available, Tse said he tried a new Caracas broker, a man called Juan Rodríguez of Consulting Services. On February 25, Tse said his colleague gave Rodríguez a USB stick giving access to 11mn USDT at a plush restaurant in the upscale Las Mercedes neighbourhood of Caracas.

In Tse’s account, he had given $132mn to two brokers and received little in return. His company says that another $54mn was lost to crypto fees and other attempts to secure oil that it declined to provide specific details about. It added that no commission was retained.

"The Polish government estimated that Orlen lost at least PLN1.6bn, about $424mn, a sum that includes shipping, legal and other costs it attributes to mismanagement."

On April 15 2024, after Orlen had terminated the Hannon contract, one of the ships it had previously chartered loaded up with heavy crude at the José terminal. The supertanker and the oil it carried were bound for the Gujarat refinery of Reliance Industries, one of the world’s largest oil processors. Someone else, with better connections, had managed to do what Awad and Tse could not.

None of this really seems like a trade, capitalism, money, or crypto story -- but rather one of fraud and faked contracts and typical impersonation "oh yeah, I can definitely sell you crude; I have PDVSA access!"

The shady USB sticks gives the story an extra neat little flavor

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