Venezuela’s state oil company, Petróleos de Venezuela S.A. (PDVSA), is taking “extreme measures” to prevent the shutdown of its refining units as a buildup of residual fuels strains storage capacity, according to four sources cited by Reuters. The crisis is compounded by U.S. sanctions restricting the entry and exit of sanctioned vessels.
Operational Crisis at PDVSA
The situation represents one of the most serious operational crises for PDVSA since the U.S. Treasury imposed sanctions on its main commercial partners in 2020. While some tankers have recently entered Venezuelan waters, with a couple more flagged as Chinese-owned expected to arrive, the majority of vessels scheduled for deliveries in December and early January have suspended their voyages.
The tightening of U.S. restrictions, aimed at ousting Venezuelan President Nicolás Maduro, has forced PDVSA to rely on intermediaries to sell its crude oil in markets like China. These intermediaries have for years utilized sanctioned vessels and a “ghost fleet” of tankers that conceal their locations to transport sanctioned Venezuelan oil.
Fuel Oil Storage Reaches Critical Levels
Venezuela’s production of extra-heavy crude, which requires dilution for transport and processing, generates large volumes of residual fuel oil normally exported to Asia. However, the blockade has drastically reduced these shipments in recent weeks, according to internal company documents and monitoring data. Approximately 25 million barrels of residue are currently stored, and the company is nearing full capacity. As one source stated, “They have nowhere to put it,” adding that “without the ships leaving, the situation is bad.”
In response, PDVSA has begun reopening inactive tanks and sending residual fuel to waste oil pools in the country’s western region. PDVSA did not respond to requests for comment. Maduro and the Ministry of Hydrocarbons have publicly maintained that Venezuela will continue to produce and export oil, but preliminary figures show Venezuelan oil exports in December fell to half the average of 950,000 barrels per day recorded in November.
Some vessels chartered by Chevron, PDVSA’s main U.S. partner, have been able to depart Venezuelan ports since mid-December.
Frequently Asked Questions
What is causing the buildup of fuel at PDVSA?
The accumulation of residual fuels is due to restrictions imposed by U.S. sanctions, which have limited the ability to export fuel oil normally shipped to Asia, according to the report.
What steps is PDVSA taking to address the storage issue?
PDVSA is reopening inactive tanks and sending residual fuel to waste oil pools in western Venezuela in an attempt to avoid shutting down refining units.
Has Venezuela’s oil production been affected?
Yes, Venezuelan oil exports in December decreased to half the average of 950,000 barrels per day recorded in November, according to preliminary figures.
As PDVSA navigates these challenges, will the current measures be enough to prevent disruptions to refining operations, or could further restrictions or logistical hurdles exacerbate the crisis?
