Venezuela could be about to declare force majeure on contracts with some of its major crude buyers.
This is due to falling output from its oil fields and tanker bottlenecks at its ports, according to a Reuters report.
There were more than 70 tankers off the coast of Venezuela earlier this
week, according to Thomson Reuters vessel tracking data.
State-owned oil company PDVSA was believed to have told some customers
that vessels should be equipped for ship-to-ship cargo transfers instead
of loading at jetties in ports. If they do not accept this, PDVSA will
consider declaring force majeure, sources told Reuters.
It was later reported that PDVSA has completed the first ship-to-ship
(STS) transfer involving the Suezmax ‘Sonangol Kalandula’, which was
believed bound for Tipco Asphalt's refinery in Kemaman, Malaysia.
According to the Reuters data, the vessel has not yet sailed and has
been waiting since February to load Venezuelan Boscan heavy crude.
PDVSA had separately begun to notify all of its customers that it will
no longer receive tankers for loading at Jose or Paraguana, its main
export terminals, until ships already waiting are loaded.
Most customers have so far refused the ship-to-ship transfer request,
due to the lack of third party supervision for the operations,
according to shippers and traders. Additional costs for completing the
transfer have also contributed to the refusals.
PDVSA has been using sanctions imposed on the company by the US as a rationale for the change, according to one source.
Venezuela's export terminals have become congested as last month, US
oil major ConocoPhillips won a court orders freezing PDVSA's key
Caribbean assets, from where the Venezuelan company used to ship large
cargoes to Asia.
Traders and shippers were sceptical that the transfers would succeed in
easing the bottlenecks, as PDVSA will still have to load vessels at
Jose to ship the cargo to the proposed offshore transfer sites, and
production declines are not expected to ease.
Venezuela's crude exports declined by 28% in the first four months of
this year to 1.19 mill barrels per day, compared with 1.65 mill barrels
per day in the same period last year, according to Reuters trade flows
data.
In January to April, crude output fell to 1.62 mill barrels per day, the lowest annual average in over three decades.
As mentioned above, aggravating the export problems, last month
ConocoPhillips started to seize PDVSA's terminals, oil inventories and
cargoes in the Caribbean to enforce a $2 bill arbitration award in a
dispute over the socialist government's nationalisation of the US oil
major's Venezuelan assets.
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