Venezuela Crude Production, Exports Recover

(Argus, 1.Dec.2020) — Venezuelan state-owned PdV’s crude production and exports have recovered in recent weeks as China resumed direct loadings and a tanker deficit the company blames on US sanctions eased, according to PdV officials and internal reports seen by Argus.

PdV’s crude exports jumped to around 500,000 b/d last month, compared with some 360,000 b/d in October, according to two PdV terminal supervisors.

The increased exports helped to drain PdV’s swollen inventories, particularly at the Jose terminal, facilitating the partial resumption of upstream operations in the Orinoco heavy oil belt and eastern Venezuela which had been shut in since mid-year, a Jose terminal supervisor said.

China restarted loading Venezuelan crude that Chinese refiners had been picking up from intermediaries since Beijing pulled back in August 2019 as a sanctions precaution.

The Xing Ye VLCC loaded close to 2mn bl of crude at Jose in mid-November. The Chinese moved back in after India’s Reliance, Spain’s Repsol and Italy’s Eni stopped loading Venezuelan crude under diesel and debt swaps that the US had been tolerating on humanitarian grounds until the end of October.

The US imposed oil sanctions on the Opec country in January 2019, and has gradually ratcheted them up since then, making it difficult for PdV to line up clients and leaving much of the business to opaque intermediaries.

At the end of November, Venezuela crude production was officially pegged at just over 471,000 b/d, compared with an Argus estimate 350,000 b/d in October. PdV’s official data is often inflated.

A senior PdV official at the company’s Caracas headquarters cautioned that the divisional upstream reports are preliminary and will be refined as volumes measured digitally and manually are reconciled.

“Some Orinoco and eastern division electronic systems for counting production have been off line since May and final data must be reconciled before it is reported officially to Opec,” the official explained.

As of 30 November, the Orinoco division reported output of around 269,000 b/d and the eastern division about 177,000 b/d.

The western division was stuck at about 25,000 b/d, but output could rebound in coming weeks. PdV has been flushing water through the wells and associated pipelines at its PetroBoscan heavy crude joint venture with minority partner Chevron in anticipation of a restart. But arrangements on where to blend the 10.9°API Boscan crude with sweet crude to produce 16°API Merey for export have not been completed yet, a western division official said.

The Bajo Grande terminal near the mouth of Lake Maracaibo “would be ideal, but it’s possible the Boscan crude could be cabotaged either to the Jose or Guaraguao terminals where storage capacity needed for blending has been freed up,” the official added.

Chevron, which has a restricted sanctions waiver to remain in Venezuela at least through June 2021, holds a 36.5pc stake in PetroBoscan. The company referred inquiries to PdV as the operator.

PdV expects to place the Merey produced with Boscan sour crude with clients either in China or India, a PdV marketing official.