Venezuela is increasingly turning to its ally Russia for crude oil, as a dramatic fall in its crude output is pushing the country to import crudes for its refineries, Platts reported on February 12, 2018.
PDVSA is resorting to importing Russian Urals crude for its 335,000 b/d Isla refinery in the Caribbean island of Curacao as the country's production has fallen to its lowest in almost 2 decades. PDVSA is said to have bought almost 3 million barrels of Urals crude this year from trading house Glencore, trading sources told Platts.
3 crude oil tankers have already left from the Baltic port of Primorsk for Curacao this year, with 1 more tanker expected to load this month, sources added. The Aframax tankers Mareta and Front Lynx discharged in Curacao in late-January while the Waikiki is expected to reach the Isla refinery in Curacao on February 18.
Russia has been a strong ally to the Latin American country through these difficult times by continuing to bailing out PDVSA. This comes as the OPEC member finds itself in a crumbling financial state as falling oil production plunges the country into economic chaos.
The country which relies heavily on crude oil export revenues has seen its domestic refining runs falls sharply due to underinvestment amid a lack of crude to process. Despite being a significant crude oil producer and the holder of the world's largest crude reserves, the country has been increasingly importing crude oil in the past few years.
This imported crude is either used as a diluent in its extra heavy oil fields in the Orinoco Basin or used by its refineries which have been struggling to operate at normal rates due to the ongoing economic situation.
These crude shipments comes as a lifeline to the refinery which is facing imminent closure due to delayed investments amid a scarcity of crude that have left the industrial services plant nearly paralyzed. Sources also said that Isla received two shipments of US crude in January.
Venezuela's PDVSA 1st imported Russia crude for its Curacao refinery in late 2014 and it bought a moderate amount of Urals in 2015 and 2016 while flows on this route were completely halted in 2017, sources added.
The 335,000 b/d refinery, which has been operated by PDVSA since 1985 under rental agreements with the Dutch Caribbean autonomous territory, is 65 km from Venezuela's coast. The contract expires in 2019 and PDVSA has been told it will be out as operator because of its failure to fulfill its contractual obligations to modernize the complex.
The decline of Venezuelan crude production, especially light and medium crudes, has impacted Isla's operations as well as PDVSA's 4 domestic refineries, which are operating at a combined 35% processing rate, according to sources.
Despite recent imports of US crude by PDVSA, the Trump administration is considering new sanctions on Venezuela's oil sector though these are not expected to be put in place till after the presidential elections in April in the OPEC-member country.
