PdV halts oil sales to PBF at client request
Caracas, 13 October (Argus) — State-owned PdV said it halted direct sales of crude to US refiner PBF Energy in September at the client's request.
PdV was making direct sales to PBF Energy of up to 1mn bl/month until August, a PdV marketing executive said. PBF's decision to stop buying crude directly from Venezuela may have been prompted by US financial sanctions imposed in August, the PdV marketing executive said.
"We believe the US sanctions were a causal factor," the PdV executive said. "PBF Energy had problems getting a letter of credit from a US bank in July and August, delaying a cargo of crude imported from Venezuela for several weeks. It appears going forward that when PBF Energy buys more Venezuelan crude it will do so through intermediaries."
But an oil trader in Caracas said PBF's problems with PdV in August were caused by the Venezuelan company's demand for full pre-payment from the refiner before offloading the cargo in Louisiana.
PBF was the fifth largest US importer of Venezuelan crude until last month.
Brazilian petrochemical firm Braskem also notified PdV last month that it was terminating a contract to import naphtha and natural gasoline from Venezuela.
PdV, PBF Energy and Braskem did not respond to requests for comment.
The US financial sanctions block new long-term financing for PdV and all of its more than 100 oil and non-oil subsidiaries, as well as the Venezuelan government.
The sanctions do not hinder PdV's commercial relations with US companies, including the issuance of up to 90-day credit instruments, like letters of credit used in oil transactions.
PdV's growing financial problems have worsened this year as its average export price remains flat and upstream output has continued to fall. Foreign oil suppliers, storage terminals, tanker and tugboat operators now routinely demand payment upfront before crude and products cargoes the company needs for its Orinoco crude blending operations are offloaded at PdV terminals.
The US financial sanctions in effect since 25 August "add another layer of difficulty and potential government intrusion to doing business with PdV, and some refiners, traders, banks and tanker operators may conclude it's safer simply to change their commercial relations with PdV," a Miami-based Venezuelan bond trader told Argus.