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
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