PdV seizing fuel stations as supply dwindles

Venezuela's state-owned PdV is taking over around three dozen service stations in an effort to tighten control over fuel sales and restructure the oil sector.

Over the weekend, PdV notified the owners and concessionaires that their fuel concessions had been revoked, giving them 72 hours to vacate their stations.

At least some of the independent stations in and outside Caracas were among a subset of 200 retail outlets that had been authorized as of 1 June to sell gasoline at $0.50/l, a move that coincided with the arrival of several Iranian fuel shipments in late May and early June. The higher-priced gasoline, which was designed to supplement limited subsidized supplies in a new rationing system, departed from years of giveaway pump prices. The US-backed political opposition said the new two-tier system would foment corruption.

The letters of notification sent to the stations were signed by PdV national market managing director Marino Jose Lugo Aguilar, who cited a 5 January 2020 economic emergency decree as grounds for the takeovers.

The Caracas Chamber of Commerce denounced the "arbitrary disregard" for legal contracts and "capricious application" of clauses and administrative powers that it says trample on the rights of concessionaires, contractors and station owners.

Venezuela has an official total of 1,568 service stations, most of which are independently owned or operated. PdV has a monopoly on production, imports and wholesale distribution, although the government recently signaled a willingness to bring in private-sector distributors.

Running on empty

The Iranian supply of gasoline and the blendstock alkylate provided Venezuela with a brief reprieve from a severe fuel shortage that has been aggravated by US oil sanctions

Following years of neglect and mismanagement, PdV's 1.3mn b/d of domestic refining capacity is nearly all collapsed, although a limited volume of low-quality gasoline is coming out of the CRP, a 940,000 b/d refining complex encompassing the Amuay and Cardon refineries.

Thanks to government-imposed pandemic restrictions, PdV has been able to stretch out the supply from Iran and its own crippled refining system.

Tehran, which is also subject to extensive US-led sanctions, has said it is negotiating with Venezuela to supply more gasoline to Caracas. Mexico's government has said it would also supply gasoline to Venezuela as a humanitarian measure, if it were asked.

Before the US imposed the oil sanctions in January 2019, PdV imported finished gasoline and components from US refiners to offset falling domestic fuel production.