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No Financing And No Demand: Chinese Refiners Run Into Trouble

No Financing And No Demand: Chinese Refiners Run Into Trouble

International banks are suspending credit…

Venezuela Hit By Gasoline Shortages

Caracas

Another problem has been added to Venezuela’s growing list of woes: gasoline import shortages that have caused lines at gas stations, Reuters reports, adding that local production has slumped too as the second-largest refinery in the country stopped operating.

PDVSA documents and shipping data from Reuters show that imports of fuel and diluents that are necessary to make Venezuela’s extra heavy refinable into fuels have since the start of the month dropped to 86,000 bpd from 225,000 bpd for April as U.S. sanctions bite deeper.

At the same time, the Cardon oil refinery, which has been operating at well below capacity even before the sanctions were introduced in January, halted operations because of damage to some of its units, Reuters quoted a local source as saying. Cardon has a capacity of 310,000 bpd but was processing just 115,000 bpd.

The news of the refinery suspension and the gas station lines comes on the heels of another update regarding production this time. Earlier this week, sources from Venezuela told Reuters none of its four heavy oil upgraders were operating as there was a shortage of buyers for the country’s crude after it lost its largest market in the U.S.

The report follows another one, by S&P Global Platts, which quoted a PDVSA report as saying production in the Orinoco Belt—the region where most of Venezuela’s oil riches are concentrated—had dropped to 169,800 bpd since the start of May. However, the reason given for the slump in that report was not the lack of buyers but rather the lack of tankers to carry the crude abroad.

Indeed, Venezuela has a barter deal with China and Russia that obliges it to repay sizeable loans with crude. However, the U.S. sanctions have targeted shippers, too, as part of the drive to remove Nicolas Maduro from power, and these have apparently heeded the warning.

By Irina Slav for Oilprice.com

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