Russian crude oil exports to Venezuela are rising as Caracas struggles to produce enough crude to supply refineries in its contracted network, according to a new report by S&P Global Platts.
Russian Urals crude is now entering Venezuela at a rate of 335,000 barrels per day to supply PDVSA’s refinery in Curacao.
So far this year, Caracas has purchased 3 million barrels of Urals crude from Swiss trader Glencore.
Four tankers are scheduled to reach Curacao from Russian ports just this month, trading sources said.
PDVSA has been the contractual operator of Curacao for many years, but the contract is set to expire in 2019. Shell, the facility’s owner, has said PDVSA will not be the facility’s operator beyond the existing contract due to its failure to meet contractual obligations to perform upgrades.
According to OPEC’s Monthly Oil Market Report published this week, secondary sources – the ones the cartel uses to monitor compliance and official stats – pegged Venezuela’s crude oil production in January 2018 at 1.6 million bpd, down by 47,300 bpd compared to December 2017. This was the largest monthly decline in oil production among OPEC’s 14 member states. Venezuela, allowed to pump as much as 1.972 million bpd under the deal, surely did not make that cut voluntarily – its economy is collapsing and oil production has been in freefall for months now.
Venezuela, for its part, self-reported to OPEC that its oil production last month increased by 148,300 bpd over December to 1.769 million bpd.
Last week, a report by Reuters quoted internal documents that said PDVSA had restarted imports to its Isla Curacao facility after a seven-month hiatus as Venezuela tries to staunch the bleeding of its dwindling fuel output.
The credit ratings agency Moody’s sees “a negative feedback loop between declining production across all economic sectors, accelerating scarcity of hard currency, and an economic policy mix defined by price controls and forced discounting that exacerbate supply shortages and hyperinflation.”