Friday, February 1, 2019

Venezuelan chaos unravelling regional tanker market


Venezuela is putting pressure on fuel suppliers to deliver cargoes to PDVSA, despite US sanctions again the state-owned oil company. 
European buyers have put scheduled export shipments on hold, according to various reports on the latest situation, received from Reuters, Platts and other sources.

The country’s fuel stocks were further depleted this week as domestic refineries were not producing much and PDVSA faced complications linked to new US sanctions aimed at ousting President Nicolas Maduro.

On Thursday, intelligence police and National Guard officials threatened to board a tanker docked at PDVSA’s Punta Cardon terminal to pressure the vessel’s crew to discharge diesel that had not been paid for by PDVSA and was sold by the company’s US refinery Citgo, according to four sources, talking with Reuters.

Venezuela was thought to have less than two weeks left of gasoline and diesel supply, according to some estimates, with lines at gas stations starting to form around the country.

In another report, it was claimed that Venezuela’s oil storage volumes have started to build up at the country’s ports and terminals, as PDVSA could not export crude at its usual level, due to the US sanctions imposed earlier this week, according to sources and shipping data.

Sanctions announced on Monday by the Trump administration were aimed at driving Maduro out of power. These have barred PDVSA’s US customers from transferring payments to the oil company.

As of Wednesday, Venezuela had 25 tankers with nearly 18 mill barrels of crude — representing about two weeks of the country’s production — either waiting to load or expecting authorisation to set sail. Most of those were anchored near the port of Jose, the country’s largest, according to Refinitiv Eikon data, analysed by the newswires.

PDVSA has responded to the sanctions by stopping tankers leaving its ports with oil bound for the US, if the cargoes have not been 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.

“We are facing problems to continue storing Merey crude,” a PDVSA source said, referring to the most common crude grade it exports, Reuters reported.

Most of the crude was bound for US customers — including PDVSA’s US 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, local reports said.

PDVSA exported 1.25 mill barrels per day of crude last year, including 500,000 barrels per day to the US. The company boosted sales in early January in anticipation of sanctions, according to Refinitiv Eikon’s data.

On Wednesday, Wills Rangel, a PDVSA board member, told Reuters the state-owned company did not plan to cancel supply contracts with US clients. Meanwhile, PDVSA President Manuel Quevedo said on Tuesday said a declaration of force majeure that would free PDVSA from paying penalties for undelivered cargoes was under consideration.

The company is looking to India to import more Venezuelan crude and is also considering imports of light crude if necessary to boost domestic production of gasoline.

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 labour union.

Sanctions require PDVSA’s US-based customers, including its refining arm Citgo Petroleum, to deposit import proceeds in special accounts out of Maduro’s reach.

They also limit US dollar transactions with PDVSA, but did not specify if US 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, Rangel said.
Venezuela’s main fuel suppliers are Citgo and India’s Reliance Industries, which typically ship naphtha, alkylate for gasoline, diesel and components from the US, according to internal PDVSA trade documents, seen by Reuters.

As of Wednesday, over 15 tankers were anchored waiting to discharge some 5.5 mill barrels of diesel, gasoline, vacuum gasoil, liquefied petroleum gas and naphtha — enough for an estimated 13 days of consumption.

Reports from Greece claimed that at least two Greek-owned tankers, belonging to Horizon Tankers and Hellenic Tankers, have been seized by the Venezuelan authorities and were only released after their cargoes were confiscated.

The tankers were carrying refined fuel for the Venezuelan market. According to shipbroking sources and reports in TradeWinds, the vessels had stopped off the Venezuelan coast but within the country’s territorial waters and said that they would not deliver their cargoes until they were paid for previous deliveries.

This practice has recently become quite common as there have been major delays in payments by PDVSA, which faces obligations of $34.6 bill.

However, the country’s authorities cited an emergency to sidestep English law – which the charterparties were based on – and enforce Venezuelan law enabling the country to confiscate the the two Greek tankers’ cargoes, as well as several others, it was reported.

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