Tanker crash shaving PdV exports up to a third

Venezuela´s crude exports could drop by a third in September because of a tanker collision at state-owned PdV´s main terminal, possibly leading to a force majeure declaration, PdV officials tells Argus.

The Greek-flagged Meganisi carrying imported naphtha collided with the terminal´s south dock during mooring operations last weekend. The accident reduced the terminal's 1.5mn b/d capacity by up to 425,000 b/d or up to a projected 15.7mn bl over a five-week period through September. "But this assumes that PdV manages to repair and restart the dock operations by 30 September at the latest," a PdV terminal official said.

Up to 100,000 b/d of naphtha imports scheduled for September are also affected. PdV and its joint ventures with foreign companies use mostly imported naphtha as a diluent to transport Orinoco extra-heavy crude and produce exportable diluted crude oil (DCO).

The south dock suffered "substantial structural damages that will take at least a month, and possibly longer, to repair," one of the officials said.

One of the terminal officials says PdV could declare force majeure or cancel the export of over 10mn bl of crude, DCO and syncrude that was scheduled for loading at the Jose terminal in the last week of August and over the month of September.

Jose was loading about 950,000 b/d or roughly two thirds of the terminal's 1.5mn b/d design capacity immediately prior to the collision, the official said. The reduced loading reflects Venezuela's steep decline in crude production in the past two years, and PdV's inability to maintain the terminal's infrastructure because of financial problems, the official said.

The affected dock will not restart loading and offloading operations until the damages are fully repaired and "the integrity of the repairs is tested to guarantee it can safely resume operations," the official added.

PdV and the energy ministry have not commented officially on what caused the collision and the impact on export and import operations at Jose. One of the terminal officials, a mid-level official with the federation of oil unions (FUTPV) chapter at Jose, blamed human error on the part of PdV shipping pilots and said "several millions of barrels of crude exports to the United States, Russia and China will be delayed."

Venezuela's top destination for crude exports in July was India, where Russia's state-controlled Rosneft has a refinery. This was followed by the US and China, according to internal PdV documents obtained by Argus last week.

PdV was using the south dock at Jose primarily to export DCO and Merey 16 blend to Rosneft as payment for a 2016 oil-backed loan of $1.5bn. Rosneft processes the Venezuelan crude at its 400,000 b/d Nayara refinery in India.

PdV has been importing more naphtha early August as it boosts DCO production to compensate for declines in synthetic crude production from four extra-heavy upgraders at Jose. These are PetroCedeño, a joint venture with Total and Equinor; PetroPiar with Chevron; PetroMonagas with Rosneft; and Petro San Felix (also called PetroAnzoategui), which is wholly owned by PdV. The upgraders, which have a total design processing capacity of more than 600,000 b/d, have been subject to frequent planned and unplanned repairs in recent years.

Jose has three docks: south, east and west plus two single monobuoy systems. These assets were refurbished in 2013-16 but PdV has experienced problems maintaining the upgraded loading infrastructure, the union official at the terminal said.

The other Jose docks and another export terminal at the CRP refining complex in western Venezuela lack capacity to offset the temporary loss of the south dock, the officials said.