Venezuela dodges oil asset seizures with export transfers at sea

Reuters  |  HOUSTON/PUNTO FIJO 

By Parraga and Mircely Guanipa

But the OPEC member nation is still fulfilling less than 60 percent of its obligations under supply deals with customers.

has been pumping this year at the lowest rate in three decades after years of underinvestment and a mass exodus of workers. The state-run firm's collapse has left the country short of cash to fund its embattled socialist government and triggered an economic crisis.

PDVSA's problems were compounded in May when U.S. oil firm began seizing assets in the as payment for a $2 billion arbitration award. An arbitration panel at the (ICC) ordered to pay the cash to compensate for expropriating the firm's Venezuelan assets in 2007.

The seizures left PDVSA without access to facilities such as in and in Bonaire that accounted for almost a quarter of the company's

Conoco's actions also forced PDVSA to stop shipping oil on its own vessels to terminals in the Caribbean, and then onto refineries worldwide, to avoid the risk the cargoes would be seized in international waters or foreign ports.

Instead, PDVSA asked customers to charter tankers to Venezuelan waters and load from the company's own terminals or from anchored PDVSA vessels acting as floating storage units.

The state-run company told some clients in early June it might impose force majeure, a temporary suspension of export contracts, unless they agreed to such ship-to-ship transfers.

PDVSA also requested the customers stop sending vessels to its terminals until it could load those that were already clogging Venezuela's coastline.

Initially, customers were reluctant to undertake the transfers because of costs, safety concerns and the need for specialist equipment and experienced crew.

But PDVSA has managed to export about 1.3 million barrels per day (bpd) of oil since early July, up from just 765,000 bpd in the first half of June, according to data and internal PDVSA shipping data seen by

That was still 59 percent of the country's 2.19 million bpd in contractual obligations to customers for that period, and some vessels are still waiting for weeks in Venezuelan waters to load oil.

There were about two dozen tankers waiting this week to load over 22 million barrels of crude and refined products at the country's largest ports, according to data.

"We are not tied to one option or a single loading terminal," PDVSA said on Tuesday of the company's exports. "We have several (terminals) in our country and we have some in the Caribbean, which of course facilitate crude shipping to fulfil our supply contracts."

CUBAN CONNECTION

PDVSA has also used a route through to ease the impact of the seizures. That route is for fuel rather than crude.

The Venezuelan company has used a terminal at the as a conduit mostly for exporting fuel oil, according to two people familiar with the operations and shipping data. Venezuela's is burned in some countries to generate

Two tankers set sail from the terminal for between mid-May and early July, Reuters data showed. Each ship carried around 500,000 barrels of Venezuelan fuel, Reuters data shows.

In recent months, has been shipping fuel to in small batches, according to the data.

PDVSA and Cuba's state-run oil firm have used Matanzas to store Venezuelan crude and fuel in the past but exports from the terminal to Asian destinations are rare.

That is in part because vessels that use Cuban ports cannot subsequently dock in the due to the U.S. commercial embargo on

did not respond to requests for comment.

PDVSA has also used ship-to-ship transfers to fulfil an unusual supply contract it has with

The refinery dates from the 1980s - when Cuba was a close ally of the during the Cold War - and the facility was built to process Russian crude.

PDVSA typically uses its own or leased tankers to bring Russian crude from storage in the nearby Dutch island of to Cienfuegos. But it is now discharging the imported Russian oil at sea in Cayman Islands' waters via these seaborne transfers.

last month ratcheted up its collection efforts by moving to depose officials from Citgo Petroleum, PDVSA's U.S. refining arm, arguing it had improperly claimed ownership of some PDVSA cargoes.

Citgo declined to comment.

is also preparing new legal actions to get courts to recognise its arbitration award. If it succeeds in those efforts, it would be able to sell the assets to help satisfy the ruling.

(Reporting by Parraga in Houston and in Fijo, Venezuela; additional reporting by in Havana; Editing by and Brian Thevenot)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Wed, August 08 2018. 01:42 IST