Struggling Venezuelan state oil company PDVSA has launched tenders to purchase a total 4.2 million barrels of U.S. and Russian crude oil, which includes up to 3 million barrels of U.S. light sweet and 1.2 million barrels of Russian Urals, Reuters reports citing tender documents.
One tender is for five cargoes, 600,000 barrels each, of WTI or DSW crude blends. According to the documents, the company would also consider taking it in alternate increments of two 1-million-barrel cargoes of U.S. crude, plus another 600,000-barrel shipment.
The other tender is for two cargoes of 600,000 barrels of Urals crude each, both for January delivery. The crude will be processed at Venezuela’s Isla refinery, which has a capacity of 335,000 bpd, but Isla has been working at reduced utilization rates because of a shortage of light crude.
If the tenders are successful—which is a questionable event indeed as Venezuela, already cash-strapped, faces even more difficulties in light of U.S. sanctions—the light crude would probably be used to make fuel oil, which is an important export oil product for Venezuela.
The tender is unlikely to relieve Venezuela of its troubles. Recent shipping data has revealed there are four tankers waiting to load crude oil and fuel oil at the port of Paraguana and another eight waiting at the Jose port—PDVSA’s largest export terminal—to load refined oil products. There are also ten vessels waiting to unload refined products for the Venezuelan market, but payments to the sellers have been delayed, and now so is unloading. Related: The Noose Tightens: Venezuela Struggles To Ship Oil
Venezuela has been struggling to rein in the decline of its crude oil production resulting from underinvestment, mismanagement, and, most recently, U.S. sanctions. In October, crude oil production fell to the lowest in nearly 30 years, as PDVSA is unable to pay for services rendered by oilfield service providers, who are now refusing to continue working with it.
To add insult to injury, the country’s largest refinery, Paraguana, suffered damages from a fire earlier this month, which caused a severe drop in capacity utilization to just 13 percent. The refinery has a daily capacity of 955,000 barrels of crude.
By Irina Slav for Oilprice.com
ADVERTISEMENT
More Top Reads From Oilprice.com:
- Santa Is Putting Christmas On The Blockchain And Saving Billions
- EIA Reports Major Draw In Crude Inventories
- U.S. Shale Sends OPEC Deal Back To Square One
They don’t give a damn if ANWR turns into a big oily swamp. When there done with it they will simply go somewhere else and drill baby drill until there is no oil left anywhere. Then what? I have a suggestion for them. Buy up all the rights and patents for EV’s now and when the oil is gone if we are still here viola another business oh and not only building new electric cars but also converting all the gasoline powered vehicles to electric. But they may want to change their name to Big EV which has an nice ring to it don’t you think?
It should have been easy for Venezuela to increase production with all those reserves to keep its earning high even at lower prices, but of course Chavez had taken complete control of the State Oil company and the incompetence and corruption that socialism breeds had already started to damage the oil industry, and production started dropping.
When Chavez die in 2013 he had already wrecked Venezuela but there were still some financial reserves and his successor Maduro stepped up oppression to continue in control. Chavez was no nuclear scientist, but compared to him Maduro is dumb as a rock, and the damage has grown worse and worse. Its take 16 years of socialism but Venezuela is broke, its defaulting on its debts, thousands of Venezuelan children are dying of hunger, the capital city can't keep electricity up, and you they don't even have toilet paper. I remember reading as a kid how in the Marxist/Socialist USSR people would line up for 12 hours to try and buy toilet paper, and its clear that socialism has only gotten worse.
To read that Venezuela with the world largest oil reserves has dropping production and can't even take advantage of near $60 oil, and is trying to import U.S oil while its children starve is bizarre. How could a country possible be so mismanaged that its destroyed its own economy and is on the verge of economic collapse? Socialism. Its happened everywhere its ever been tried. Even the Chinese have dropped it in favor of state controlled mercantile Capitalism. Yet oddly enough the Democrats in the U.S. under Obama have become the Marxist/Atheist party of America. They want full and total authoritarian socialism just like Venezuela. We saw the results of Obama trying to impose it on the country with 8 years of the worst growth since the Great Depression, and misery everywhere. An economy kept afloat under the socialist oppression of Obama only by $10 trillion in DEBT, and $6 Trillion in funny money created out of thin air by the Fed, as well as endless Zero interest rates.
Notice that since Nov and the election of a capitalist businessman the U.S. economy has started to grow, create jobs, and boom.
In any event their is a huge glut of oil and excess production capacity in the world, and even if Venezuela goes belly up it will only prop up prices which means U.S. oil production will continue to soar, the glut might go down for a short period, but higher prices will only lead to that production being replace. Worse for the future price of oil as the Venezuelan economy collapses at some point the people of Venezuela are going to get tired of watching children start and they are going to overthrow the socialist/Marxist dictatorship. At that point a new Government will bring in outside help to turn the oil spigots back on so Venezuela can start the long road back to recovery. The sooner they get rid of Maduro and his socialist nightmare the sooner Venezuela can put aside socialist insanity and recover. Of course if they wait to long the resource, OIL, that can help them recover fast may well become near worthless. So they'd better make up their minds. If they wait too long their oil will be worthless and the road to recovery will take decades not the years they'll need if they can get the oil to flow.