Fuel crisis weighs on upstream operations

The fuel supply gap in the country is growing as PdV has failed to replace refined products previously imported from the US

Venezuela's severe motor fuel deficit is starting to weigh on the country's crude production, as oil workers struggle to reach their jobs, and oil equipment and supplies fail to reach oil fields.

The fuel crisis could push crude output below the May average of around 750,000 b/d, senior oil union officials warn. Venezuela's domestic gasoline consumption as of 15 June had declined to about 80,000 b/d and diesel consumption to about 60,000 b/d, compared with peak consumption of 300,000 b/d of gasoline and 190,000 b/d of diesel in 2014, according to an internal oil ministry memorandum seen by Argus.

The memorandum attributes the plunge in fuel consumption to the "operational collapse" of state-owned PdV's refineries and the company's failure to replace refined products formerly imported from the US, and now banned by US sanctions, with products sourced from non-US suppliers. The supply gap would be worse if not for Venezuela's acute economic contraction that has eroded demand, and the breakdown of up to two-thirds of the country's automotive fleet of some 5mn units, an oil ministry official says.

PdV union officials in the oil-producing states of Zulia, Guarico, Anzoategui and Monagas say the fuel deficit in their operational areas forced the company to quietly suspend all of its remaining in-house worker transportation services two weeks ago.

Food distribution to company cafeterias at the oil fields has also stopped, union officials in Zulia and Monagas say. "There is no fuel for PdV's own fleet of passenger and goods transport services, and other public and private alternatives are down for lack of fuel," a union official in PdV's Orinoco division says. "Oil workers without transportation are choosing to stay at home and production operations are being affected by the growing absenteeism."

Oil minister and PdV chief executive Manuel Quevedo maintains that fuel supplies are sufficient and blames any supply shortages on panic buying. But union officials at the 940,000 b/d CRP refining complex in Falcon state and the 190,000 b/d Puerto La Cruz plant in Anzoategui say the fuel deficit is structural and will probably persist for months, until PdV restarts its refineries.

The CRP complex, which includes the 635,000 b/d Amuay refinery and 305,000 b/d Cardon refinery, is processing about 120,000 b/d of crude to produce about 60,000 b/d of diesel and about 40,000 b/d of poor quality gasoline that does not meet oil ministry specifications for the local market, a senior oil union official says.

Running on empty

Venezuela's worsening fuel crisis is also starting to impact operational readiness levels in the armed forces and other government security agencies such as Bolivarian intelligence service Sebin, a defense ministry official says. Information on military fuel consumption and reserves controlled by the armed forces is classified. But the military, which depends on PdV for the entirety of its fuel needs, has been forced since April to curtail training exercises and patrols.

Caracas still appears to be adequately supplied, but the oil ministry says over half of the city's vehicles are off the streets, reducing consumer pressures at the fuel pump.

The government has not imposed fuel rationing officially at a domestic level. But unofficial rationing is in effect everywhere outside Caracas. The lack of fuel has also restricted most interstate passenger transportation and much food distribution in the interior of Venezuela.

Veneuelan crude production