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PdV’s estranged refining partners tap new supply

27 Apr 2017 12:00 (+01:00 GMT)
PdV's estranged refining partners tap new supply

Punta del Este, 27 April (Argus) — The Dominican Republic and Jamaica have replaced almost all of the oil once supplied from their Venezuelan refining partner, state-owned PdV.

The two Caribbean countries had been among the most prominent members of Venezuela's PetroCaribe program that was founded in 2005 to supply crude and refined products to neighboring countries on below-market terms. The initiative has long been seen as a political tool to ensure support for the Venezuelan government.

PdV remains a 49pc partner in both Refidomsa's 34,000 b/d Haina refinery in the Dominican Republic, and Petrojam's 35,000 b/d Kingston refinery in Jamaica. But Venezuelan supply to the two refineries has dropped to a trickle.

"The Venezuelan supply is small but variable. Most of the crude we are running in the refinery is Maya and Olmeca from Mexico," Dominican deputy hydrocarbons minister Alberto Reyes told Argus on the sidelines of the Arpel oil and gas conference in Uruguay. The country is importing all of its oil products from the US, he said.

Jamaica is taking less than 2,000 b/d of Venezuelan crude, Jamaican officials say. Part of the diesel that Jamaica had been receiving from Venezuela to run its power stations has been displaced by LNG imports that started up at Montego Bay last year. State-owned PCJ is in preliminary talks with China's state-owned SinoHydro to upgrade the refinery, a project that PdV had previously promised to help carry out.

At the end of 2014 the Dominican Republic owed PdV over $4.12bn for PetroCaribe supply, but successfully wrote off almost $2.1bn of that debt in a heavily discounted refinancing operation in which PdV received a lump sum payment of almost $2bn in cash. Jamaica paid most of its PetroCaribe debt in 2015.

Venezuela´s PetroCaribe oil supplies have dwindled over the last two years, reflecting PdV´s declining domestic production. The trend coincides with increasing international isolation of the Venezuelan regime of president Nicolas Maduro.

Even the main beneficiary of Venezuela's oil largesse, close ally Cuba, is forging supply alternatives from Algeria, Trinidad and Tobago and other countries.

Although the Dominican Republic and Jamaica no longer depend on Caracas for oil supply, the two governments have not joined larger Latin American countries such as Brazil, Mexico, and Argentina in condemning the Venezuelan government's escalating crackdown on political opponents. More than 30 Venezuelans have died in protests and looting since early April.

Former Dominican president Lionel Fernandez was among the facilitators of a discredited dialogue between the Venezuelan government and some members of the opposition that fell apart last year.