- Sanctions were approved by the administration of U.S. President Donald Trump, aimed at driving President Nicolas Maduro out of power.
- PDVSA exported 1.25 million barrels per day (bpd) of crude last year, including 500,000 bpd to the United States.
- Paraguana Refining Center is working at 40 percent of its 955,000-barrel-per-day capacity and has stock for another 15 days.
- Around 15 tankers are anchored near PDVSA’s ports waiting to discharge some 5.5 million barrels of fuel.
According to Reuters, Venezuela’s oil inventories have started to build up at the country’s ports and terminals as PDVSA is finding it cannot export crude at its usual rate due to U.S. sanctions imposed earlier this week.
Sanctions approved
On January 28, Sanctions were approved by the administration of U.S. President Donald Trump, aimed at driving President Nicolas Maduro out of power after his contested re-election last year, have barred PDVSA’s U.S. customers from transferring payments to the firm. That is effectively limiting state-owned PDVSA from shipping that oil because Maduro’s government cannot collect the proceeds.
According to Refinitiv Eikon data, as of Wednesday, Venezuela had 25 tankers with nearly 18 million barrels of crude – representing about two weeks of the country’s production – either waiting to load or expecting authorization to set sail. Most of those were anchored near the port of Jose, the country’s largest.
Tankers prohibited
PDVSA responded to the U.S. sanctions by prohibiting tankers loading oil bound for the United States to leave Venezuelan ports if cargoes are not prepaid.
In addition, PDVSA’s inability to pay for crucial imports means fuel imports are delayed, adding to the glut of tankers off Venezuela’s coast. A PDVSA source said, referring to the most common crude grade it exports that they are facing problems to continue storing Merey crude.
Most cargoes were bound for U.S. customers – including PDVSA’s refining unit Citgo Petroleum, Chevron Corp, Valero Energy, and PBF Energy. Other large vessels loaded with Venezuelan oil and fuel were waiting to depart for Singapore, India, and China.
PDVSA exported 1.25 million barrels per day (bpd) of crude last year, including 500,000 bpd to the United States. The company boosted sales in early January in anticipation of sanctions.
Searching for new markets?
Wills Rangel, a PDVSA board member, on Wednesday told Reuters the state-owned company, which is currently producing 1.2 million bpd of crude, does not plan to cancel supply contracts with U.S. clients. An instruction was given to define new export markets in 15 to 30 days. That comes even though PDVSA President Manuel Quevedo on Tuesday said a declaration of force majeure that would free PDVSA from paying penalties for undelivered cargoes was under consideration. Meanwhile, PDVSA is eying exports to other destinations.
The company is looking to India for more imports and is also considering imports of light crude if necessary to boost domestic production of gasoline.
Washington’s measures against the socialist Maduro, who has overseen the country’s economic collapse and an exodus of millions of Venezuelans in recent years, aim to back a new government formed by the opposition leader Juan Guaido.
Gasoline in short supply
PDVSA is facing problems unloading fuel imports for domestic use because sanctions are making it difficult to complete payments for deliveries, according to Rangel, who also leads the firm’s labor union.
Sanctions require PDVSA’s U.S.-based customers, including its refining arm Citgo Petroleum, to deposit proceeds from imports of Venezuelan oil in special accounts out of Maduro’s reach. They also limit U.S. dollar transactions with PDVSA, but do not specify if U.S. fuel can still be exported to Venezuela.
PDVSA will insist the fuel cargoes are discharged and try to find a way to pay for them, according to Rangel. He did not elaborate on how the state-run company would convince suppliers and shipping firms hired to transport the cargoes to accept payments and discharge shipments under PDVSA’s terms.
Key fuel partners
Venezuela’s main fuel providers are Citgo and India’s Reliance Industries Ltd, which typically ships naphtha, alkylate for gasoline, diesel, and components from the United States, according to internal PDVSA trade documents.
PDVSA has fuel inventories at its terminals sufficient to cover a month of domestic Venezuelan consumption, according to Rangel’s numbers, as its main refining complex, the Paraguana Refining Center is working at 40 percent of its 955,000-barrel-per-day capacity. But sources at PDVSA estimate stocks at closer to 15 days of consumption, with little-finished gasoline or diesel.
Tankers waiting
As of Wednesday, over 15 tankers were anchored near PDVSA’s ports waiting to discharge some 5.5 million barrels of imported diesel, gasoline, vacuum gas oil, liquefied petroleum gas, and naphtha – enough for an estimated 13 days of consumption.
That would give PDVSA more leeway to supply gas stations and power plants if tankers are finally discharged.
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Source: Reuters
