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PdV halts direct sales to US refiner

17 Oct 2017, 3.23 pm GMT

PdV halts direct sales to US refiner

PBF will have to buy Venezuelan crude through intermediaries following its decision to end direct purchases from PdV

Caracas, 17 October (Argus) — Venezuelan state-owned PdV halted direct sales of crude to PBF Energy in September at the US refiner's request.

PdV sold up to 35,000 b/d directly to the US firm until August, a PdV marketing executive says. PBF's decision may stem from the latest wave of US sanctions against Venezuela imposed in August, the executive says.

"PBF 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," the executive says. "It appears going forward that when PBF Energy buys more Venezuelan crude, it will do so through intermediaries."

But a Caracas-based oil trader says PBF's problems with PdV were caused by the Venezuelan company demanding full pre-payment from the refiner before it offloaded a cargo in Louisiana.

The latest wave of US sanctions block new long-term financing for PdV and its subsidiaries, as well as the Venezuelan government. They are not designed to impede PdV's commercial relations with US companies, as they exclude the issuance of credit instruments of up to 90 days, such as letters of credit used in oil transactions.

US sanctions "add another layer of difficulty and potential government intrusion to doing business with PdV", a US-based Venezuelan bond trader says.

PdV's financial problems have worsened this year as its declining crude output leaves it unable to benefit from firming oil prices. Foreign oil suppliers, storage terminal operators and shipping firms now routinely demand payment upfront before they deliver crude and products cargoes to PdV terminals.


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