Venezuela Oil Exports Rise, Output Cuts Continue

Venezuela’s oil exports under a flagship $2bn supply deal with the U.S. reached around 7.8 million barrels on Wednesday, vessel-tracking data and state-run PDVSA documents show, with shipments accelerating after Washington eased its blockade — but not enough for PDVSA to fully reverse output cuts.

Following the U.S. capture of President Nicolás Maduro in early January, Caracas and Washington agreed a deal to sell up to 50 million barrels of Venezuelan crude stored in tanks and vessels. Trading houses Vitol and Trafigura obtained the first U.S. licences to load and export cargoes from the OPEC country.

However, the supply has yet to significantly reduce PDVSA’s swollen inventories, which grew during a nearly month-long U.S. blockade on exports, leaving Venezuela with tens of millions of barrels in storage on land and on loaded tankers stranded in Venezuelan waters.

Energy giant PDVSA, which cut production in early January due to a lack of storage capacity, has yet to fully reverse those cuts as it waits for storage levels to fall, according to the documents and company sources.

Sales have been slow because refiners have refused to pay the prices demanded by trading firms, sources familiar with the negotiations said. Difficulties in transferring and storing the stranded oil elsewhere have also slowed the flow.

Offers of Venezuela’s flagship Merey heavy crude to U.S. refiners began last week at a discount of $6 to $7.50 per barrel below Brent. That was above Canadian crude prices — a similar quality oil that is readily available — giving refiners little incentive to switch to Venezuelan supply.

Vitol and Trafigura also offered cargoes to Indian refiners at $8–8.50 per barrel below Brent, but this drew little interest. The traders have since deepened discounts to around $9 per barrel, but have still seen limited demand, trading sources said.

The U.S. has continued seizing Venezuela-linked tankers in the Caribbean, so shipowners have been reluctant to engage in the trade, the sources added.

Vitol and Trafigura declined to comment, and PDVSA did not immediately respond to requests for comment. Curaçao’s government last week confirmed that Venezuelan oil was being stored there.

Last week, U.S. officials said around $500m from the first oil sales would be deposited into a fund controlled by the U.S. government.

U.S. Energy Secretary Chris Wright told Reuters the initial sales were negotiated at a “fair price” of around $45 per barrel for Venezuela, representing some 11m to 12m barrels allocated through the trading firms.

It remains unclear which mechanism Washington will use for future sales to reach the announced 50m-barrel supply, but many PDVSA partners and customers are awaiting U.S. licences to resume or expand exports.

Slow departures

Since the first two tankers left Venezuelan waters on 12 January bound for storage terminals in the Bahamas and St Lucia, five other vessels have followed, carrying Venezuelan crude to those ports and to the Bullen Bay terminal in Curaçao, shipping data shows.

Aside from cargoes chartered by trading houses, the only other company currently exporting Venezuelan crude is Chevron, PDVSA’s main joint venture partner, which has increased shipments to about 221,000 barrels per day so far this month from 100,000 bpd in December.

Export volumes from traders have reached around 780,000 bpd since 12 January, when they began moving cargoes under U.S. licences. This has brought total exports to about 1 million bpd — close to normal levels but still far from easing accumulated stockpiles.

Oil prices rose on Wednesday amid optimism over tighter supply after a temporary shutdown at two large fields in Kazakhstan, and as Venezuelan export volumes highlighted slow progress in reversing PDVSA’s output cuts.

Venezuela’s crude output fell to about 880,000 bpd in early January from 1.16m bpd in late November following PDVSA’s production cuts, mostly in the Orinoco Belt.

Some oilfields have begun restoring production in recent days, but most areas remain below capacity, company sources said.

Copied