Venezuela Delays Crude Shipments amid Operational Mishaps, Low Output

Venezuelan state oil company PDVSA has delayed and canceled crude deliveries to commercial partners in recent months, according to documents seen by Reuters, a further sign of the steady production decline of the country's top export.

 

From October through January, PDVSA canceled or delayed delivery of almost 7 million barrels of crude due to cargoes being rescheduled or skipped, often because it did not have enough oil available, according to internal company documents seen by Reuters.

 

Most pending cargoes were supposed to be delivered to regular buyers including U.S. Phillips 66 and Thai TIPCO Asphalt. Other shipments were canceled even before being assigned to specific customers.

 

Phillips 66 and TIPCO hold supply contracts for some 10 monthly cargoes of Venezuelan heavy crude, or about 180,000 barrels per day (bpd).

 

PDVSA and TIPCO did not respond to requests for comment. Phillips 66 declined to comment.

 

The accumulated delays to these partners represented 30,000 bpd at the end January, according to the documents.

 

PDVSA has also fallen months behind on shipments of crude and fuel under oil-for-loan deals with China and Russia, according to internal PDVSA documents reviewed by Reuters, which includes 3.2 million barrels of Boscan heavy crude bound for China's state-run CNPC.

 

PDVSA's main export products are crude and fuel oil, a relatively heavy, dirty refined product that is used mostly for power generation. Crude and fuel oil together last year accounted for 92 percent of some 2.1 million bpd in total exports, according to Reuters data.

 

But the OPEC country's economic crisis and frequent operational problems have pushed oil output to a 23-year low, leaving PDVSA without enough crude to keep sending oil to traditional customers or supply its own refineries.

 

"Everybody is worried about PDVSA's compliance with supply contracts due to delays and loading problems at certain terminals," said one trader who deals in Venezuelan crude and spoke on condition of anonymity.

 

Since October, PDVSA has canceled five cargoes of Merey crude totaling 2.75 million barrels that were destined for Phillips 66 and in January delayed an 800,000 barrel cargo of Boscan crude to TIPCO for lack of supply, according to company documents.

 

Delays have been especially problematic for shipments of crude grades produced in western Venezuela, according to another trader, speaking on condition of anonymity.

 

Exports of those crude grades have declined sharply due to lack of investment in the area's aging fields and recent problems loading crude at certain terminals affected by oil leaks.