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Venezuela's PDVSA dwindling fuel to halt buses and tanks alike


By Argus

Petroleumworld 03 06 2019

Venezuela could exhaust its fuel stocks in a week, disrupting public transportation, food distribution, power generation and some military deployments that depend on supply from state-owned oil company PDVSA (PdV), according to oil union and military officials consulted by Argus .

"We anticipate four to six weeks of critical fuel shortages," a union official said.

That is how long it is expected to take PdV to find new foreign suppliers of gasoline, diesel and other oil products that its crippled local refineries no longer produce, the union officials say. PdV had been importing most of its products from the US, but new US oil sanctions are starting to cut off oil trade in both directions. Crude and products tankers are piling up at PdV's main export and import terminal of Jose and the US Gulf coast as buyers and sellers pull back from the Venezuelan market.

At least a dozen tankers holding more than 5mn bl of US products were blocked by cargo owners from offloading at Jose since the US sanctions were announced on 28 January. The cargo owners have declined to take payment from PdV, and US and European banks have stopped doing business with PdV, the union officials said.

As political tensions rise, the Opec country's shrinking fuel stocks could impede the ability of sitting president Nicolas Maduro to effectively deploy security forces to repress demonstrators who support Juan Guaidó, who is now recognized by most Western countries as Venezuela´s interim president.

The defense ministry declined to disclose the status of fuel stocks held by the armed forces , national guard and national police force. On paper, the armed forces are supposed to have a strategic fuel reserve for each of six regional commands responsible for internal order and national defense.

An army officer based at Fort Tiuna in Caracas says the army has burned through more fuel since December because of increased troop movements toward the border with Colombia and a higher tempo of military training exercises.

The army's dedicated fuel stocks have been contaminated by water and rust, forcing armored brigades and divisions to rely on commercial gasoline and diesel supplies from PdV, which has already halved distribution to prolong its inventories.

Three of five Venezuelan air bases -- Barcelona in Anzoategui state, Barquisimeto in Lara, and Santo Domingo in Tachira -- operate out of commercial airports where jet fuel stocks and storage tanks are in "decent" condition. In a crisis, commercial flights could be grounded to redirect the fuel to military use. At two other independent bases -- Francisco Miranda (La Carlota) in Caracas and Palo Negro in Maracay the state of fuel stocks are unclear. Even if stocks are ample, the Venezuelan military's Russian, Brazilian and aging US aircraft are largely grounded for lack of maintenance and spare parts, military sources tell Argus .

A gasoline deficit that halts most public transportation for several weeks could give Maduro the advantage of blaming sanctions for future hardship. So far he has vowed to stay in power, accusing Washington and its allies that back Guaidó of plotting a coup.

A US-backed campaign by Guaidó to bring in humanitarian aid through Colombia later this week will test the resolve of Maduro and the military top brass that supports him. Venezuela´s foreign minister Jorge Arreaza calls the campaign a "show" and blames any suffering on the US for blocking Venezuelan funds.

Meanwhile Venezuelans are starting to stock up on food and fuel in anticipation of more acute shortages, with an increase in foot traffic crossing into Colombia where goods are relatively plentiful.




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