Venezuela coke port disruptions arise again

A surge in Venezuelan petroleum coke exports that have saturated some import markets over the past few months may be slowing, as some loading disruptions have resumed at the port of Jose.

A recently completed private terminal that uses barges to midstream load Supramax vessels is still operating well, sources said. But the older two coke-loading terminals at the port are beginning to face disruptions that are leading to delayed shipments, resulting in congestion at the port as vessels must compete for loading windows.

At least one cargo that was destined for an Indian cement maker had faced delays of at least 10-15 days because of problems at the Jose port, the buyer said in late June. A seller cancelled another cargo that had been sold to an east coast India buyer, an Indian trader said.

As a result, some Indian buyers are now questioning whether this 4.5pc sulphur coke is worth the risk even at a $10-15/t discount to Saudi Arabian 8.5pc sulphur coke. Some sellers are said to be offering Venezuelan coke at a $30/t discount to the Argus 6.5pc sulphur coke cfr India index. But even that may not be enough to make up for the risks inherent in this origin. "I think Venezuelan coke should be at a discount of $50-$60/t compared with the US material," one buyer said.

A month or two ago, it seemed that the Latin American country may have finally solved its long-standing infrastructure woes and was making strides towards working down the massive stockpiles of coke that have built up at the port of Jose. Maroil Trading, owned by Venezuelan shipping magnate Wilmer Ruperti, earlier this year finally began operating a new terminal that loads coke onto barges and then into oceangoing vessels, bypassing Jose port's creaky original coke-loading berths. State-owned oil company PdV also managed to get its original terminals operational, at least for a time.

China reported 137,700t of Venezuelan coke cleared customs in April, followed by 330,500t in May, according to Global Trade Tracker. This huge influx of cargoes weakened China's demand for high-sulphur coke in general, contributing to a sharp drop in pricing that in turn led sellers to chase buyers in the Indian market. Indian customs data is only available through April, which is not yet reflecting Venezuelan imports. But by mid-June, market participants reported there had been at least six cargoes of Venezuelan coke sold to Indian buyers, which could total as much as 300,000t. And at least one Indian cement buyer was still in negotiations to book a July-loading cargo as of late June, suggesting some interest remains despite the recent re-emergence of loading challenges.

Venezuela could supply much more to global markets were it not for persistent infrastructure bottlenecks. Venezuela's process of upgrading heavy and extra heavy oil from the Orinoco fields results in a large volume of coke production — every upgraded barrel of Orinoco extra heavy oil generates 25kg of coke, according to a November 2021 report from the Venezuelan Academy of Physical, Mathematical and Natural Sciences. While the country had been a key exporter to northwest Europe, Turkey, Brazil and the US since the late-1990s, policies implemented by former leftist president Hugo Chavez beginning in 2008 resulted in a slowdown in exports. Long conveyor belts and aging shiploaders resulted in regular loading delays, sometimes lasting months. After 2008, coke began accumulating at a rate of 8,000 t/d, and by 2015, 10mn t had accumulated several stories high on 30 hectares (0.3 km2) of terrain around Jose, according to the report. Some coke market participants estimate the stockpiles have reached as high as 25mn t.

The country's exports were further hampered by US sanctions on PdV implemented in 2019, which caused many international buyers to avoid purchasing its coke. Some cargoes have made their way to buyers in countries like China, Turkey and Tunisia in recent years, but exports have remained sporadic until recently.

Some has reportedly been shipping to ally Cuba over the past few years.

Despite the recent surge in exports to Asia, analysts in Caracas say the "mountain" is still there. And there is some indication that the country's infrastructure cannot keep up the pace of 300,000-400,000 t/month of shipments that it had been recently achieving.

"This is Venezuela," one trader said. "European clients remember it from the past. Indians will have to learn."

By Lauren Masterson and Carlos Camacho