PdV oil exports backlogged despite debt deal

A partial resolution of Venezuelan state-owned PdV's $2bn debt impasse with ConocoPhillips has yet to reactivate the Opec country's exports, resulting in a significant backlog.

"PdV has run out of storage capacity in eastern Venezuela but still has sufficient storage capacity in western Venezuela to hold out another two weeks before it is forced to start reducing production or else expand floating storage," a PdV official told Argus.

Tankers started to pile up off Venezuela's coast after ConocoPhillips levied liens on PdV's Dutch Caribbean assets in early May, leading the company to pull its tankers into Venezuelan waters to avoid court-ordered seizure.

On 18 May, courts in the Dutch Caribbean islands of Curacao and Bonaire ordered the partial lifting of the liens, mainly on stored oil, to allow PdV to supply local demand. In exchange, all revenue from the local sales will go into escrow accounts from which ConocoPhillips will be paid.

Curacao expects its court ruling to lead PdV to restart the 330,000 b/d Isla refinery and Bullen Bay terminal that it leases from the government. As stored oil is drawn down, PdV will have to resume crude shipments to Curacao, on the understanding that they will not be embargoed. But the narrow scope of the court rulings means that PdV may not have sufficient legal confidence to resume the full-fledged offshore transshipment and blending operations that it normally conducts in the islands to facilitate large-scale exports, mainly to the US, China and India.

PdV remains at risk of asset seizure by its many other creditors who may be encouraged by ConocoPhillips' aggressive enforcement actions.

The operational backlog threatens to reverberate onto production, which is already in steep decline. PdV has ample storage capacity on paper, but not all of it is operational because of scant maintenance spending. Capacity features almost 41mn bl of combined crude and products storage at PdV's primary export terminals.That includesabout 8mn bl at Jose and 3mn bl at Guaraguao in eastern Venezuela, plus 21.7mn bl at the Amuay refinery, which is also used by the nearby Cardon refinery.

A further 5.8mn bl of terminal storage capacity is located at Puerto Miranda in Lake Maracaibo and 1.4mn bl at the inoperative Bajo Grande refinery on the lake's eastern shore.

PdV has another 24.1mn bl of storage near its principal upstream operating areas, including over 19mn bl at nine western division tank farms and 5.1mn bl at five eastern division tank farms, PdV executives say.

As of today 106 crude and products tankers are anchored in Venezuelan waters, an increase of 22 tankers from the 84 that marine tracking sites registered as of 10 May. PdV is effectively using many of its tankers for floating storage, senior officials of the federation of oil unions (FUTPV) tell Argus.

The union officials point to a logistical mismatch that is affecting operations. PdV's Jose and Guaraguao terminals in the east have insufficient storage capacity, while terminals in western Venezuela from which less than a third of the company's exports are now shipped have over twice as much storage capacity.

Currently 41 tankers are anchored in Pozuelos Bay near PdV's Jose and Guaraguao terminals in Anzotagui state, including three berthed at Guaraguao. As of this morning there were no tankers berthed at the Jose terminal through which two-thirds of PdV's oil exports normally are shipped.

Another 39 tankers are anchored near the 940,000 b/d CRP refining complex in Paraguana, including three berthed at the 305,000 Cardon refinery terminal. Two more tankers are in the process of berthing at the nearby 635,000 b/d Amuay refinery.

A further 10 tankers are lying at anchor near PdV's 140,000 b/d El Palito refinery in Carabobo state. Six of a remaining 16 tankers appear to be navigating between the CRP and Jose/Guaraguao, and 10 more are anchored near Caracas, Carenero and Puerto Miranda in Lake Maracaibo.

Three additional tankers are entering Venezuelan waters en route to PdV's Jose terminal.