Venezuela's crude production entered November on a downswing after the US banned non-US companies from crude-for-diesel swaps at the end of October.
Output was slipping below an October average of 350,000 b/d as Spain's Repsol, Italy's Eni and India's Reliance stopped crude liftings and low-sulfur diesel supply that had previously been permitted under the US sanctions, Venezuelan oil industry sources told Argus.
The diesel cut-off has left Venezuela's state-owned PdV with few export options and nearly replete storage, a pattern repeated over the course of the nearly two years since the US imposed the oil sanctions in January 2019. Crude exports in October plunged to roughly 350,000 b/d, half of the September level.
Among PdV's joint ventures that are still partially operating is PetroPiar, a heavy crude upgrading project in which Chevron holds a 30pc stake. The 170,000 b/d upgrader, based in the eastern industrial complex of Jose, is producing around 65,000-70,000 b/d of synthetic crude.
Chevron and a handful of US-based oil services companies remain in Venezuela under a restricted sanctions waiver that the US government is expected to renew again when it expires on 1 December, regardless of the outcome of the tense US presidential race currently in play.
Into the woods
The Venezuelan government of President Nicolas Maduro routinely blames the sanctions for the national oil industry's decline, most acutely reflected in a gasoline shortage. PdV's efforts to repair its 305,000 b/d Cardon refinery, one part of its mostly broken 1.3mn b/d refining system, have largely stalled.
Another gasoline supply respite could be on the horizon, after Iran's foreign minister Javad Zarif met with his Venezuelan counterpart Jorge Arreaza and Maduro yesterday in Caracas. Iran shipped gasoline to Venezuela in May-June and again in September-October, briefly alleviating a severe deficit that has fortified a black market controlled by Maduro loyalists, a trend that could now extend to increasingly scarce diesel as well.
The US recently impounded Iranian oil cargoes aboard Liberia-flagged, Greek-owned tankers that it claimed were en route to Venezuela, but it did not stop the gasoline and alkylate shipments that came directly from Iranian state-owned NIOC aboard Iran-flagged vessels.
For most Venezuelans, the most pressing fuel shortage is for LPG, which is traditionally used for cooking. The supply gap has widened because of PdV's impaired natural gas production and fractionation infrastructure in eastern Venezuela. Electric hotplates to which many residents have resorted often short-circuit because of choppy electricity service, a problem that the diesel cut-off and associated blowback on Repsol and Eni's offshore gas production are likely to aggravate. The combination of fuel shortages has created an unprecedented market for firewood, which is selling for as much as $4/cord.
