Published On: Fri, Oct 28th, 2016

Logistics woes in the Caribbean for Venezuela’s PDVSA

oil refineryWILLEMSTAD - Growing financial troubles for Venezuela's PDVSA have started to snarl its logistics and operations in the Caribbean, where unpaid bills have frustrated suppliers and business partners.

Here's a rundown of the state-run oil company's recent setbacks in the region, where PDVSA controls a third of refining and storage capacity.

* Curacao's port authority in September carried out a court order to detain the Aframax tanker "Hero," owned by PDVSA's unit PDV Marina, because of several million dollars in unpaid bills owed to Core Laboratories' oil inspection unit Saybolt, sources with knowledge of the situation told Reuters. The vessel, which has been unable to discharge 520,000 barrels of fuel oil from Isla refinery, has been anchored in the Caribbean sea for more than a month. The seizure delayed an important delivery bound for China. Curacao's Port Authority referred questions to PDVSA, which did not respond to several requests for comment.

* In the Bahamas, PDVSA was blocked from loading cargoes at the massive BORCO terminal in September because of unpaid rent on storage tanks, according to a PDVSA source and a ship broker. The debt had been partially paid earlier this year only to increase again in recent months.

* About a dozen tankers carrying imported crude and refined products that PDVSA bought from private suppliers have faced weeks-long delays after arriving in Venezuela and the Caribbean. They include two U.S. oil cargoes sold by BP that were supposed to be received in the second quarter. The British oil company has declined to discharge the cargoes until PDVSA pays for them, according to trading sources and Thomson Reuters vessel tracking data. Upfront payment demands are unusual in an industry that usually extends buyers 30 days to pay after receiving their shipments.

* Pending payments to small firms that clean oil tankers at Venezuelan loading ports have also piled up in recent months, according to shippers and a source from a PDVSA joint-venture company. This has delayed shipping crude cargoes and caused bottlenecks around some terminals, mainly Bajo Grande in Western Venezuela.

* PDVSA also owes operators of liquified petroleum gas tankers. A portion of the fleet PDVSA uses to transport the product among its ports is now anchored near Venezuela, according to a PDVSA source and internal company documents.

* Cuba, which has long solely received oil from PDVSA, in October imported the first of two crude cargoes from Algeria's Sonatrach, according to shippers and Thomson Reuters vessel tracking data. The purchases, which also include at least two jet fuel cargoes, are another sign of falling Venezuelan exports.

* The government of Curacao in September signed a preliminary agreement with China's Guangdong Zhenrong Energy to replace PDVSA as operator of the 335,000-barrel-per day Isla refinery and an attached terminal, the largest facilities the Venezuelan company currently operates in the Caribbean.

* PDVSA faces a similar problem with the 35,000-bpd Kingston refinery, according to a transcript of a debate at Jamaica's Parliament. The island's refining company, Petrojam, has been pushing PDVSA for capital investments to revamp the plant.

* Venezuela's oil company is on track to suffer its steepest crude production decline this year in more than a decade amid low global grices.

Reporting by Marianna Parraga in Houston, Sailu Urribarri in Oranjestad and Rebekah Kebede in Kingston; Editing by Terry Wade and Brian Thevenot

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