According to documents and data from the company, Venezuela's PDVSA state-run oil firm has begun filling up 'tankers' with crude oil and fuel oil that it has in its storage. This is because inventories are increasing amid U.S. moves to seize Venezuelan-linked ships.

This month, the U.S. Coast Guard intercepted a pair of tankers, the 'Skipper' and 'Centuries, in the Caribbean Sea. Both were fully loaded with Venezuelan oil. And this week, the Coast Guard was pursuing a third vessel, which was empty, as it approached the shores of the OPEC nation.

Many ship owners have fled the country after President Donald Trump announced a blockade on all vessels that are subject to U.S. sanction. More than a dozen ships remain in Venezuelan waters, waiting to leave.

Documents show that the 'emerging backlog', caused by PDVSA's production of 1.1 million barrels per day, has quickly filled the company's tanks onshore, particularly at the Jose Terminal, which receives extra heavy oil, mainly from the Orinoco Belt region.

PDVSA has begun transferring part of its oil inventories onto oil tankers, according to shipping and company data. This is a strategy that it has used in the past to avoid reducing oil production.

Documents?showed that since PDVSA’s main joint venture partner Chevron did not suspend exports of?crude grades? they jointly produce, Venezuela’s western region's inventories, where storage capacity was very limited, were close to normal levels.

Chevron is only responsible for?about one quarter of crude grades produced in blending stations and upgrading facilities along the Orinoco belt, or 130,000 barrels per day. PDVSA exports three of the other quarters of crude oil to China. This is where about 80% Venezuelan crude exports have been going this year.

PDVSA's offshore stocks, which include crude oil and diluents at Jose, were reduced by 9 million barrels in November from the 17 million barrels they had earlier this year. Documents showed that by mid-December, they had once again exceeded 10 million barrels.

PUSHING BACK AND FORWARD

Sources at PDVSA said that the company had been urging customers to continue receiving oil cargoes bound towards China in the Jose port until last week. However, it is becoming more difficult to convince them after the U.S. targeted two additional vessels over the weekend.

Sources said that the company has been forced to build floating storage as it negotiates with customers to reduce prices and change contracts, while other customers begin to insist on returning their cargo to terminals.

Sources claim that top officials of PDVSA considered but declined to declare force majore on some crude exports last week in order to negotiate with customers individually. Force majeure is when a seller releases itself from contractual obligations due to circumstances beyond its control.

Venezuelan President Nicolas Maduro said Monday that oil cargo deliveries to Chevron for export will continue despite the dispute with Washington which is increasing pressure on him to step down.

"The contract with Chevron is to be completed, regardless of rain, thunder or lightning. In a televised address, he stated that "we are serious and decent people."

Chevron has said repeatedly that its operations continue in Venezuela "without disruption and in full conformity with the laws and regulations applicable to their business." Reporting by Marianna Paraga, Arathy Sommesekhar and staff in Houston; Editing by Nathan Crooks, Alistair Bell

(source: Reuters)