Venezuela’s state-run oil company PDVSA has started filling up tankers with crude and fuel oil it has in storage as inventories mount amid moves by the U.S. to seize Venezuela-linked ships, according to company documents and shipping data.
The U.S. Coast Guard this month intercepted the Skipper and Centuries tankers in the Caribbean Sea, both fully loaded with Venezuelan crude, and was this week pursuing a third empty vessel that was approaching the OPEC country’s shore.
The actions targeting some vessels of a so-called “shadow fleet” of ships carrying sanctioned oil, coupled with President Donald Trump’s announced blockade of all vessels subject to U.S. sanctions, has scared many ship owners away and left more than a dozen cargoes stuck in Venezuelan waters waiting to depart.
The emerging backlog, as PDVSA produces about 1.1 million barrels of crude per day, is quickly filling the company’s onshore tanks, especially at the Jose terminal, which receives extra heavy oil from the country’s main output region, the Orinoco Belt, according to the documents.
PDVSA began draining part of those inventories to oil tankers over the past weekend, shipping and company data showed, a strategy it has resorted to in past years to avoid cutting back oil production.
Since PDVSA’s main joint-venture partner Chevron has not suspended exports of the crude grades they jointly produce, most inventories at Venezuela’s western region, where storage capacity is very limited, are close to normal levels, the documents showed.
Chevron, however, is responsible for only about a quarter of the crude grades produced at blending stations and upgraders in the Orinoco Belt, or about 130,000 bpd. PDVSA typically exports the three other quarters to China, which has been the destination of about 80% of Venezuela’s crude exports this year.
As oil exports had stabilized and rose through November, PDVSA’s onshore stocks at Jose, including crude and diluents, had reduced to some 9 million barrels last month from a peak of 17 million barrels earlier this year. But by mid-December they had again surpassed 10 million barrels, the documents showed.
PUSHING BACK AND FORWARD
PDVSA had been pushing customers to continue receiving oil cargoes bound for China at the Jose port through last week, but convincing them is now growing difficult after the U.S. targeted two more vessels over the weekend, company sources said.
Building floating storage has become necessary as the company negotiates price discounts and contract changes with some customers, while others begin to push to return their cargoes to the terminals, the sources added.
Last week, top officials at PDVSA discussed but then declined to declare force majeure over some crude exports, sources said, in an attempt to negotiate individually with its customers. Under force majeure, a seller frees itself from its delivery commitments for reasons out of its control set in contracts.
Venezuelan President Nicolas Maduro on Monday evening said oil cargo deliveries for Chevron to export would continue even amid the dispute with Washington, which is ratcheting up pressure on him to leave power.
“(Under) rain, thunder, or lightning, and regardless of any conflicts, the contract with Chevron will be fulfilled. We are serious, decent people,” he said in a televised speech.
Chevron has repeatedly said that its operations in Venezuela “continue without disruption and in full compliance with laws and regulations applicable to its business.”
(Reporting by Marianna Parraga and Arathy Somasekhar in Houston, and Reuters staff; Editing by Nathan Crooks and Alistair Bell)