PdV oil flows to Cuba swell

Venezuela's PdV will direct up to 3mn bl of oil to Cuba over the next two weeks to supply the government's political ally and alleviate a sanctions-driven backlog in crude exports, two oil union officials told Argus.

Although the state-owned Venezuelan oil company has long supplied Cuba under preferential terms, the volumes had diminished to around 50,000 b/d from more than 100,000 b/d in 2015. But the new shipments amount to more than 200,000 b/d over the 14-day period, suggesting that Caracas is seeking to offload some oil that it can no longer store.

The cargoes of heavy crude and refined products are already loaded aboard six tankers owned by PdV and are currently anchored near the company's CRP refining complex, according to the workers who are based on the facility. The cargoes include gasoline, diesel, fuel oil and 16°API Merey blend.

An official with PdV shipping subsidiary PdV Marina said two of the six tankers have been authorized to depart en route to Cuba but had not left as of yesterday.

The official said Venezuela-flagged tanker Terepaima was authorized on 29 September to deliver 500,000 bl of fuel oil to Matanzas in Cuba but as of yesterday was still anchored off the 305,000 b/d Cardon refinery, which is part of the CRP along with the 635,000 b/d Amuay plant.

Products tankers Manuela Saenz and Luisa Caceres de Arismendi, both under Venezuelan flag, are expected to depart Amuay with up to 700,000 bl of gasoline to Cuba before the end of this week, the PdV Marina official said.

PdV had imported the gasoline and diesel ostensibly to alleviate a critical fuel shortage in Venezuela, but the company was ordered by the government to re-export some of the fuel to Cuba, an oil ministry official said. Cuba, which has been supplied by PdV for close to two decades under preferential terms, is experiencing a sharp fuel deficit as well, crippling transport and power generation.

Crude tanker Yare, currently anchored off Cardon, is loaded with Merey that was transported from the Jose terminal to the CRP, but its final destination is Cuba, the oil union officials said.

Tankers Icaro and Paramaconi, both currently moored near Amuay and registered in Panama and Venezuela, respectively, are scheduled to transport up to 600,000 bl of fuel oil to Cuba within the next 10 days, the PdV Marina and CRP officials added.

PdV uses these tankers alternately for floating storage and cabotage, and to transport supply to Cuba, which relies on oil for transportation and power generation. The crude is processed at state-owned Cupet's Cienfuegos refinery. Some of the spare crude and products heading to the island could also be resold.

PdV regularly switches off the transponders on vessels delivering oil to Cuba.

For PdV, the crude exports in particular could help to alleviate an export bottleneck caused by US sanctions. Although the sanctions have no secondary component, many buyers are reluctant to transact Venezuelan barrels. And while facilitating Venezuela oil exports to the international community is not explicitly forbidden by US sanctions, Venezuela-to-Cuba oil shipments are. Last month, the US lifted designations on some tanker operators that cancelled Venezuela-Cuba contracts and designated new shipping entities that were still involved.

PdV held a 49pc stake in the Cienfuegos refinery until its financial and upstream operational problems forced it to withdraw in August 2017 from its partnership with Cupet.

Both countries are the target of expanding US sanctions aimed at forcing out Venezuela's president Nicolas Maduro in favor of opposition leader Juan Guaido. Washington blames Havana for propping up Maduro.

The flood of new oil shipments to Cuba is likely to add to the frustration of Maduro's opponents, who are hoping international pressure will push out their foe to lay the groundwork for a transition government.