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Venezuelan vehicles moving thanks to Rosneft

Carlos Becerra/Bloomberg

Venezuela subsisting on trickle of gasoline

By Argus

Petroleumworld 10 28 2019

Venezuelan state-owned PDVSA (PdV) is currently importing about 60,000 b/d of gasoline, a fraction of normal demand that its broken refineries are no longer able to meet, according to an internal oil ministry report obtained by Argus .

Russian state-controlled Rosneft is Venezuela's biggest foreign fuel supplier, although PdV also imports from Spain's Repsol, India's Reliance and Chinese state-owned CNPC through barter deals for its heavy sour crude.

"Venezuelan vehicles are still circulating thanks to Rosneft," a ministry official said.

Gasoline is delivered at the Amuay and Cardon terminals in Paraguana, the Bajo Grande terminal near the mouth of Lake Maracaibo and the Jose complex in Anzoategui, oil union officials at these terminals say.

Some of the gasoline imports are re-exported to Venezuela's close ally Cuba , union officials at the Bajo Grande and Amuay terminals added.

The oil ministry estimates current gasoline demand at up to 130,000 b/d compared with 150,000 b/d in 2018 and 175,000 b/d in 2017. Gasoline demand peaked at just over 300,000 b/d in 2012, ministry figures show.

Fuel demand has fallen in response to the moribund economy, a shortage of functioning vehicles and emigration.

PdV's gasoline imports plus scarce domestic production from the 635,000 b/d Amuay refinery currently fluctuate around 65,000-75,000 b/d, leaving a supply deficit of up to 65,000 b/d mainly in the interior of Venezuela.

"Amuay still produces some poor-quality gasoline of around 40-60 octane, below oil ministry standards 87-95 octane," a senior oil union official at the 940,000 b/d CRP refining complex tells Argus.

The CRP, which oil union officials estimate is currently operating at about 10pc of its nameplate capacity, includes Amuay and the 305,000 b/d Cardon refinery.

PdV allocates about half of available gasoline to Caracas, the ministry report notes. Caracas as of mid-October was getting about 35,000 b/d, with a further 35,000 b/d allocated to the rest of Venezuela.

The capital city of Caracas is routinely prioritized for fuel as well as electricity, LPG, food and medicine supplies in order to avert social unrest.

But PdV has lost "effective control" of its fuel distribution system, ceding operations in at least 13 of 23 states to corrupt military officials, local authorities and armed gangs that openly extort drivers for food and cash before dispensing fuel, the oil ministry report said.

States reporting the worst gasoline shortages at mid-October included Anzoategui, Apure, Barinas, Bolivar, Cojedes, Falcon, Guarico, Lara, Merida, Portuguesa, Tachira, Trujillo and Zulia. Drivers in these states now wait for hours or even days to tank up, according to the report and multiple PdV officials.

Retail gasoline sales in the interior are restricted 20 liters for small automobiles and up to 30 liters for larger vehicles.

Repeated attempts by government authorities in Caracas to crack down on extortion rackets at service stations have failed because "mostly the local officials that get asked to halt the corruption are the ones controlling the corruption," a ministry official said.

In states bordering Colombia, a thriving black market of curbside street vendors dispensing 20-liter containers of gasoline for the equivalent of about $15 in Colombian pesos has also emerged in recent months.

Gasoline smuggling to Colombia, where fuel is sold at higher prices, has plunged to around 25,000 b/d compared with 100,000 b/d as recently as 2017 because there is little Venezuelan supply to ferry out. "Gasoline supplies have declined very dramatically since 2017 so there's much less available to steal and smuggle to Colombia," a senior oil union official in Zulia said.

Colombian officials have confirmed the downward trend. Fuel in Colombian border states is sold at lower prices in order to try to discourage smuggling by narrowing the price differential.

Drivers in Caracas still have access to gasoline, but because of a nationwide shortage of low-denomination bank notes and coinage most drivers increasingly pay pump operators with food and other products such as alcohol and cigarettes. Cash payments usually are kept by pump operators to supplement low weekly wages.

PdV still issues commercial invoices for the gasoline it distributes to service stations, but effectively halted all collections since the end of 2018, the ministry report notes.

A PdV domestic marketing official noted that Venezuela's currency has become so depreciated since 2017 that a tanker truck loaded with 38,000 liters of gasoline and invoiced at decades-old regulated gasoline prices costs less than one US cent for the entire cargo at the current black-market exchange rate.

Story from Argus Media. 10 25 2019


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