Venezuela attempts to reduce 24m barrel backlog in ports

Venezuelan state-run oil company PDVSA has completed its first ship-to-ship (STS) transfer as it strives to reduce the number of tankers stationary around its main crude ports, reports Reuters.

Venezuela was nearly a month behind in shipping crude to customers from its main oil export port. The chronic delays threatened to breach state-run PDVSA’s crude supply contracts. PDVSA has warned that deliveries could be interrupted to some of the world’s largest refiners if it fails to reduce the backlog rapidly.

Tankers are sitting off the country’s main oil port, waiting to load almost as much oil as PDVSA shipped in all of April. The backlog is so severe that PDVSA has told some customers it may declare force majeure, allowing it to temporarily halt contracts if customers do not accept new delivery terms.

On June 6th more than 80 tankers were waiting in Venezuelan waters, half of them to load crude and refined products for exports, said Reuters.

In May asset seizures forced PDVSA to stop using Caribbean facilities for storing and loading export cargoes, although PDVSA’s non-compliance with oil supply contracts started months ago. In April, PDVSA apparently shipped 1.49m bpd of crude and fuels to its customers, 665,000 bpd below the 2.15m it was contracted to supply.

Customers waiting for cargoes with tankers already at sea include Chevron, Valero Energy, Nayara Energy and CNPC and its trading unit PetroChina.

One condition PDVSA is trying to impose to avoid breaching contracts is for customers to agree to load cargoes in ship-to-ship operations off the nation’s western coast. That would ease congestion at its Jose port. However a ship-to-ship (STS) transfer solution, which would take place in waters 6 miles from Venezuela’s Cardon refinery, is being resisted by many oil buyers, as such transfers require specialized equipment, handling by specialists and facilitated by mooring masters. The captain of the receiving tanker also has to be trained to perform the operation, a shipper said.