FILE PHOTO: Crude oil tankers are docked at Isla Oil Refinery PDVSA terminal in Willemstad on the island of Curacao, February 22, 2019. REUTERS/Henry Romero
The top U.S. buyers of Venezuelan oil are in the unusual position of trying to return millions of barrels of crude they need but cannot accept because of U.S. sanctions on the South American nation and its state-run energy firm PDVSA.
The Houston-based Citgo cut ties with its parent company in compliance with U.S. measures that halted its purchases of PDVSA’s oil, the documents said.
A U.S. Treasury spokesperson declined to comment on the requests to pay PDVSA for the cargoes.
As of March 8, the 11 loaded vessels remained anchored off ports in Venezuela. Two other Chevron-chartered cargoes were stuck off the U.S. Gulf Coast and a third was returned to Venezuela’s Amuay terminal, according to Refinitiv Eikon vessel-tracking data.
PDVSA does not expect Citgo or Valero to accept the cargos and intends to “commercially reallocate the volumes onboard so tankers can be freed,” a Feb. 21 trade and supply document showed. The same document expressed worry over demurrage fees - the daily cost for storing the oil on tankers - which have been accumulating for over a month.
PDVSA SCRAMBLES TO AVOID EXPORT SHORTFALL
Separately, a days-long blackout across the country has halted exports from Jose port, the nation’s primary crude export terminal. PDVSA on Monday was trying to restart operations.
The Venezuelan company has been forced to redesign its production and export logistics in recent weeks to avoid halting operations, including formulating new crude blends, swapping a large portion of its oil for imported fuel, selling through intermediaries and finding new customers.
But the efforts have not been enough to avoid an export decline. The OPEC-member country’s oil shipments fell to some 920,000 barrels per day (bpd) in February according to Refinitiv Eikon data.
PDVSA exports could fall further due to a lack of imported naphtha, a light distillate, needed to dilute its extra heavy oil as the company has been able to secure only two 500,000-barrel cargoes versus 2-3 million barrels per month needed, according to the document.
If it cannot import enough naphtha to formulate its oil for export, PDVSA plans to start mixing other domestic fuels to ready oil for export.
Lack of maritime crews to take PDVSA tankers idled due to unpaid shipping fees is also hampering oil deliveries between domestic ports and to the Caribbean, where PDVSA stores and ships much of its export barrels.
Some shipping firms’ reluctance to work in Venezuela after sanctions have stopped PDVSA from using leased tankers to ease storage bottlenecks at its Orinoco Belt’s joint ventures. The ones willing to work with PDVSA are charging high prices and extra fees, the document added.
On March 4, PDVSA completely shut output at its Corocoro oilfield, which was producing some 12,000 bpd, due to lack of storage capacity. Its Pedernales oilfield could follow due to similar issues, according to the report. The four Orinoco upgraders were working at minimum on Monday.