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Venezuela’s Gasoline Shortage Is Worsening

Venezuela’s state oil company PDVSA suspended gasoline production at the El Palito refinery after a problem with a valve led to a fire, unnamed sources familiar with the incident told Reuters.

The El Palito refinery has a processing capacity of 146 barrels daily and had only been in operation for less than a week before the fire occurred. After the suspension of operations at El Palito now, Venezuela is left with only the Cardon refinery to produce much-needed gasoline. The Cardon facility has a processing capacity of 300,000 bpd of crude, but gasoline output was 30,000 bpd as of yesterday, according to Reuters.

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The gasoline shortage in Venezuela is the result of lower production of crude and years of mismanagement at refineries, as well as U.S. sanctions, which have cut off gasoline imports from the country. Despite a shipment of Iranian crude earlier this year, the shortage has become so severe that people have resorted to stealing crude oil from the fields and refining it at home.

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At the idled oilfield La Concepcion in western Venezuela, for example, people have made holes in the pipelines that were used to transport the crude to storage tanks. PDVSA employees are ready to accept bribes not to report such thefts as their meager salaries quickly evaporate with the hyperinflation, Reuters reported last month, citing unnamed sources.

Venezuela’s oil production has reached a new low this year under the pressure of sanctions and the pandemic. In September, output fell to 397,000 bpd, from 1.2 million bpd before January 2019, when the United States started imposing sanctions on the government in Caracas, specifically targeting the oil industry of the country.

Exports, however, are on the rise: in November, Venezuela exported more than 500,000 bpd, according to data reported by Bloomberg. PDVSA used a tactic made popular by Iran to make tankers undetectable for most of their journey by turning off their transponders until they approached their destination.

By Charles Kennedy for Oilprice.com

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