Partial Port Closure May Further Delay Venezuela’s Oil Cargoes

The closure of a dock at a key Venezuelan port could delay the shipment of around 5 million barrels of Venezuelan crude oil to Russia's Rosneft, adding to Venezuela's troubles in fulfilling crude delivery and oil-for-loan cargo shipments, Reuters reports, citing internal documents of state firm PDVSA and a source.

Over the weekend, a Greek-flagged tanker carrying heavy naphtha from the United States struck the South dock at the Venezuelan port of Jose, and the collision led to the shutting of the South dock. This has been limiting PDVSA's capacity to export crude oil and import diluents to blend with its heavy oil, sources with knowledge of the incident told Reuters earlier this week.

The South dock was the one that PDVSA was using for those shipments, and under an agreement from earlier this year, the Venezuelan state oil firm was to deliver 4 million barrels monthly of heavy crude oil to Rosneft, according to the Reuters source and the PDVSA documents it has seen.

U.S. companies Valero and Chevron were also taking Venezuelan oil from the South dock at Jose before the collision this weekend. According to the PDVSA documents, the Venezuelan company planned to deliver under spot deals and supply contracts 4.5 million barrels to Valero, Chevron, and other U.S. companies this month, although it's not immediately clear how much of these volumes the companies had taken before the collision partially closed the Jose port.

The trouble at the port could also curtail Venezuela's imports of heavy naphtha, which it uses to blend with its heavy oil to upgrade it for exports. According to Reuters, the South dock at Jose was supposed to import this month 3 million barrels, or 100,000 bpd of heavy naphtha-a bigger-than-usual volume because some crude upgraders in the Orinoco Belt were set for planned stoppages.

The partial interruption of the Jose port operations is the latest in a string of troubles for Venezuela's oil industry and exports. Earlier this year, reports had it that PDVSA may be forced to declare force majeure on crude oil exports if clients awaiting delivery continue to refuse to accept new contract terms the company has proposed as a means of coping with a tanker build-up at its two biggest export terminals.

By Tsvetana Paraskova for Oilprice.com

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