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Venezuela’s PDVSA Fails To Meet Oil Supply Obligations

Venezuela’s state oil company PDVSA has told eight foreign clients it will be unable to supply the contracted volumes of crude oil, a company employee told S&P Platts.

"Among the affected clients due to the low availability of crude to export are Nynas, Tipco, Chevron, CNPC, Reliance, Conoco, Valero, and Lukoil, which will partially receive the volumes established by the contracts," the person said.

The amount the company will not be able to supply is close to half of the total committed volumes of this grade, Merey 16, for June. It only has 578,000 bpd of the grade available, while the total contracted volume is 1.271 million barrels daily. PDVSA’s total crude commitments for the month stand at 1.495 million bpd, but it only has 694,000 bpd available.

Plagued by mismanagement, corruption, and most recently a lack of investment money under the double weight of U.S. sanctions and lower oil prices, PDVSA has seen its production plummet over the last couple of years. S&P Platts estimates this plunge has wiped out as much as 900,000 bpd from the company’s daily production, with the latest daily average standing at 1.41 million bpd in April.

Earlier this month, an executive from India’s largest oil company, ONGC, said that PDVSA owes it US$444 million in payments due under a joint project between the state company and the overseas division of ONGC, OVL. Related: U.S. Asks OPEC To Boost Oil Production By 1 Million Bpd

“They paid us three installments and have not paid any money for more than six months,” OVL’s managing director Narendra Verma said at a news conference. According to OVL, Venezuela’s PDVSA has not paid dividends from the project to the Indian firm between 2009 and 2013, while no dividends have been declared after that.

Meanwhile, collapsing Venezuela has reportedly offered India a 30-percent discount on crude oil purchases, but only if India agrees to pay in El Petro. India doesn’t plan to use Venezuela’s ‘petro’ cryptocurrency to pay for crude oil imports from the Latin American nation, Indian Foreign Minister Sushma Swaraj said earlier this week.

By Irina Slav for Oilprice.com

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