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As Venezuela scrambles for fuel, looming sanctions tangle exports

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Reuters PUNTO FIJO, Venezuela/HOUSTON
Last Updated : Feb 01 2019 | 5:10 AM IST

By Mircely Guanipa, Marianna Parraga and Collin Eaton

PUNTO FIJO, Venezuela/HOUSTON (Reuters) - Venezuela is ramping up pressure on fuel suppliers to deliver cargoes to its state-run oil firm even if payment issues have not been sorted amid U.S. sanctions, while European clients put scheduled export shipments on hold.

The country's fuel stocks have drained further in recent days as domestic refineries produce little and PDVSA faces complications linked to new U.S. sanctions aimed at ousting President Nicolas Maduro from power.

On Thursday, intelligence police and National Guard officials threatened to board a tanker docked at PDVSA's Cardon port, on Venezuela's western coast, to pressure the vessel's crew to discharge diesel that had not been paid for by PDVSA and was sold by U.S. refiner Citgo Petroleum, according to four sources.

The furor dissipated after PDVSA told the crew a court order would be issued to have the cargo discharged, but it underscores growing tension over fuel needs in the country. Venezuela has less than two weeks left of gasoline and diesel supply, according to some estimates, with lines at gas stations starting to form around the nation.

The United States and most Latin American governments have recognized opposition leader Juan Guaido as rightful head-of-state.

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The European Parliament on Thursday also backed Guaido and agreed to lead an international crisis group to seek new elections, threatening further economic sanctions.

That could cut off the flow of Venezuelan oil to Europe, adding to a glut sitting off PDVSA's ports that total over two dozen tankers carrying almost 18 million barrels of crude. The U.S. sanctions prevent payments from going to Maduro's government.

The stuck cargoes include vessels meant to go to U.S. clients including Citgo, Valero Energy, Chevron Corp and PBF Energy. Refineries in the United States have started to reduce crude processing, and Valero said Thursday that it had stopped buying Venezuelan crude.

PDVSA earlier this week said no crude tankers will be allowed to set sail if cargoes are not paid in advance. But the company and its customers have not yet found a way to secure those payments without contravening sanctions.

PDVSA did not immediately respond to a request for comment.

The tanker carrying diesel arrived in Venezuelan waters on Jan. 25 before sanctions were issued, and finished unloading a first parcel of diesel at Puerto la Cruz refinery's dock earlier this week, according to Refinitiv Eikon data.

But when it started to discharge a second parcel at Cardon, the process was suspended, according to the sources. The Mambo tanker was originally loaded with 300,000 barrels of diesel bought by Citgo from a U.S. supplier, they added.

EUROPEAN CARGOES ON HOLD

European refiners and oil firms including PDVSA's partner Nynas AB and Spain's Repsol have put on hold cargoes that were scheduled to be shipped from Venezuela until the U.S. Treasury clarifies if oil swaps will be allowed and European countries announce any sanctions to come, according to sources and Refinitiv Eikon data.

"We have no way to lift Venezuelan crude right now," said a trader from an European company that has two cargoes on hold at Jose terminal on Venezuela's eastern coast.

Nynas said it would not respond to rumors, and Repsol was not immediately available for comment.

U.S. sanctions do not prohibit Europe from receiving Venezuelan oil or trading houses, including Europe-based ones like Trafigura or Vitol, from acting as intermediaries for Venezuelan cargoes to be ultimately sold to refineries around the world.

But White House national security adviser John Bolton on Wednesday warned PDVSA's customers and partners off continuing to do business with the state-run oil company.

(Reporting by Mircely Guanipa, Marianna Parraga and Collin Eaton; editing by David Gaffen and Rosalba O'Brien)

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First Published: Feb 01 2019 | 4:55 AM IST

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