U.S. Citgo increases exports to Venezuela, giving PDVSA a breather
HOUSTON (Reuters) -- U.S. refining firm Citgo Petroleum is sending more products to its parent company, Venezuela's PDVSA, to compensate for problems in the South American country's domestic network, according to sources and Reuters data.
State-run PDVSA has shipped some 190,000 barrels per day (bpd) of crude to Citgo this year, but since the third quarter Citgo has sent a large volume of refined products to Venezuela in exchange to help the cash-strapped oil firm, the data show.
The shipments do not solve the shortage of refined petroleum products in Venezuela resulting from outages and long maintenance periods at almost all its refineries. But they have helped prevent larger lines at gasoline stations in some parts of the country.
From August to mid-November, PDVSA has received three or four cargoes per month of U.S. products from Citgo of about 300,000 barrels each, including gasoline blend stock, diesel and naphtha, according to Thomson Reuters vessel tracking and trade flows data. That is up from five cargoes for the entire second half of 2015.
Citgo's cargoes are being paid through a mechanism known as offsetting, which allows PDVSA to discount the value of the imported products from the invoices for crude exports, sources from the Venezuelan company and its refining unit said.
The increase in imports from Citgo has also allowed Venezuela to blend its extra heavy crude and meet its exports contracts, bringing in crucial cash flow for the country, which depends on oil for over 90 percent of its exports revenue.
Tankers sent by Citgo are therefore given priority. They are among the few vessels authorized to discharge at Venezuelan ports without delays, while other suppliers of crude and products to PDVSA have faced weeks-long waiting times to be paid before unloading, sources from two oil companies said.
As of Nov. 17, a dozen tankers were waiting around PDVSA's ports for authorization to discharge, including a 525,000-barrel cargo of U.S. oil sent by BP in September and six cargoes of refined products and liquefied petroleum gas supplied by trading firms including Noble Americas and Vitol SA.
PDVSA found some financial relief through a $2.8 billion debt swap in October, which allowed it to pay some delayed invoices, including for oil supplies, the sources said.
But PDVSA did not achieve its goal of swapping at least 50 percent of its bonds maturing in 2017, so cash flow remains insufficient to pay all creditors at the same time. This has limited its portfolio of suppliers.
The recurrent delays to discharge imports and refinery problems have hurt Venezuela's domestic fuel market, sparking lines at pumping stations in several states and creating a scarcity of 95-octane gasoline, the most consumed one, which needs imported alkylate to be formulated.
An oil union representative, Jose Bodas, said the purchases from Citgo are not enough to compensate for the low-performing domestic refineries.
At the end of last week, Venezuela's refining network was working at around 45 percent of joint capacity of 1.3 million bpd due to paralysis of the El Palito refinery and partial operation of the country's largest facilities, Amuay and Cardon.
Reporting by Marianna Parraga in Houston, with additional reporting by Mircely Guanipa in Punto Fijo, Venezuela; Editing by David Gregorio
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