Polish state energy company Orlen paid Dubai-based trader Hannon International a $230 million advance in November 2023 to secure Venezuelan oil, but did not receive a significant portion of the promised volume. The Polish government estimated Orlen’s total losses from the failed transaction at at least $424 million, including vessel chartering, legal and other expenses.

The details were reported by the Financial Times, citing internal Orlen documents, court filings, vessel-tracking data, blockchain analysis and interviews with people involved.

Orlen agreed to buy 6 million barrels

Samer Awad, then head of Orlen’s trading unit, Orlen Trading Switzerland, met Hannon founder Kam Ho “Alex” Tse during the Formula 1 Grand Prix in Abu Dhabi in late November 2023. Tse was 25 at the time.

OTS signed a $345 million contract with Hannon on November 29 to buy about 6 million barrels of Merey 16 heavy crude from Venezuelan state oil company PDVSA. Orlen expected the transaction to generate a profit of $25 million to $30 million.

The contract required OTS to pay two-thirds of the amount upfront. It transferred $230 million to Hannon within five days. Although the contract did not mention cryptocurrencies or intermediaries, Hannon was responsible for purchasing the oil from PDVSA and arranging delivery to Orlen.

Funds were converted into USDT

After receiving the advance, Hannon sought to buy the oil and convert part of the money into USDT. It initially obtained 80 million USDT through a Dubai financial firm, paying about $400,000 in fees.

Hannon also transferred $135 million to Dubai-based Horizon Global but, according to the trader, received only 85 million USDT. The disputed $50 million difference became the subject of court proceedings in Dubai.

Hannon sent a further $30 million to Gold Mar International Trading, expecting it to be converted into USDT and passed through a Venezuelan intermediary to PDVSA. The money never reached the state oil company, according to the source. Hannon said Venezuelan contacts had advised it not to retain records of cryptocurrency transactions.

In January 2024, Tse and a colleague traveled to Caracas in an armored vehicle with security to try to arrange deliveries. According to the Financial Times, Hannon representatives dealt with intermediaries who claimed to have connections to PDVSA, transferring some USDT through USB drives containing digital keys.

A Hannon representative gave a man named Jose Castillo access to 60 million USDT on January 5 and another 50 million USDT on January 28. Hannon later lost contact with him, and the Financial Times was unable to obtain his comment.

Hannon transferred another 11 million USDT in February and 11 million in March to a second intermediary, Juan Rodriguez. Tse said contact with Rodriguez was also later lost. According to Tse, Hannon handed the two brokers a total of $132 million but received almost no oil in return. Hannon also reported $54 million in cryptocurrency transaction fees and other expenses incurred while trying to arrange deliveries.

Tankers waited without cargo

Three supertankers chartered by Orlen arrived in Venezuelan waters and anchored near the Jose terminal. Orlen expected Hannon to supply about 6 million barrels of Merey 16 in three shipments by December 19, 2023, but the vessels waited for weeks without cargo, generating demurrage charges.

Hannon initially attributed the delays to PDVSA revising its prices and later said larger buyers received priority before sanctions relief ended.

OTS separately sought other Venezuelan products to reduce Hannon’s debt. It rejected a 1 million-barrel cargo in January because of severe contamination. On January 26, OTS agreed to buy 1 million barrels of Venezuelan fuel oil, but one Orlen-chartered tanker loaded only about 500,000 barrels on March 8. The remaining volume was not delivered.

Contract terminated and recovery sought

OTS terminated the unfulfilled Merey 16 contract on March 28, 2024. By then, vessel chartering costs under the agreements with Hannon had reached $72 million, exceeding Orlen’s expected profit from the original transaction.

An internal OTS assessment prepared ahead of a meeting with KPMG auditors rated the likelihood of recovering the funds from Hannon as low. Orlen’s vessels subsequently left Venezuela, with only one carrying oil: about 500,000 barrels of fuel oil valued at $28.8 million.

Orlen is seeking to recover the $230 million advance through arbitration. Hannon said it was participating in the proceedings and remained open to an amicable settlement.

The parties dispute Hannon’s role. Hannon says it acted as an intermediary tasked with buying Venezuelan oil using USDT because OTS could not do so directly, and that Orlen knew how the transaction would operate. Orlen’s new management says Hannon was contractually responsible for delivering the oil and that its use of third parties did not relieve it of that obligation.

Polish prosecutors investigate former executives

The Warsaw prosecutor’s office is separately investigating former Orlen executives over possible inadequate oversight of OTS’s $600 million trading fund. Awad and other former unit executives have been charged with criminal negligence and abuse of office. They deny the allegations.

Awad was detained in the United Arab Emirates in January 2025 at Interpol’s request. An Emirati court rejected Poland’s extradition request, and he was released.

Former Orlen chief executive Daniel Obajtek also denies personal responsibility for OTS’s transactions. He says decisions granting access to the trading fund were made collectively by Orlen’s board of directors.

Source: Incrypted