A cash-strapped, and bankrupt, PDVSA has resorted to siphoning oil from its cash-paying joint ventures with foreign firms to feed its domestic refineries.
In one example, PDVSA asked its Petropiar joint venture with Chevron to turn over as much as 45% of the oil it planned to export in November without payment. While state-owned PDVSA predictably did not respond to a request for comment by Reuters, Chevron – which stands to lose far more – similarly declined to comment. Reduced exports of Petropiar’s crude is mainly having an impact on customers in the United States, according to one of the sources and Thomson Reuters trade flows data.
“PDVSA started requesting some cargoes from Petrocedeno for the Paraguana Refining Center (CRP). Now it is asking Petropiar to relinquish almost half of its crude production,” the Reuters source said.
From August through October, PDVSA took at least 1 million barrels per month of heavy crude from Petropiar after acquiring Zuata Sweet crude from Petrocedeno earlier this year. It is seeking 2 million barrels, or 45% of Petropiar’s total production for November.
Venezuela’s action is a bizarre form of self-cannibalization, as PDVSA’s joint ventures export upgraded crude to buyers around the globe and as such, Maduro’s diversion cuts into the main source of the government’s revenue. The likely reason why the government has resorted to such a drastic decision, one which will significantly cut into Venezuela’s only source of dollar funding, is to deal with intermittent, and increasingly acute fuel shortages plaguing the nation because of the poor condition of its refineries, which in some cases are working at a third of capacity.