Venezuela suggests ready to pay after Conoco moves on its Caribbean assets

Adjust Comment Print

COP reportedly has been trying to seize PDVSA's oil assets at the 335K bbl/day Isla refinery in Curacao, after temporarily seizing ~4M barrels of crude that PDVSA had stored on St. Eustatius island and taking control of a terminal on Bonaire, prompting PDVSA to move several oil tankers away from the region.

The legal action was the latest in the Caribbean to enforce a $2 billion arbitration award by the International Chamber of Commerce (ICC) over the nationalization.

For the time being, PDVSA has suspended all oil storage and shipping from its Caribbean facilities and concentrated most shipping in its main crude terminal of Jose, which is suffering from a backlog.

PDVSA's U.S. refining unit Citgo Petroleum also uses the Aruba terminal to discharge, store and blend Venezuelan and foreign crudes for its refineries along the U.S. Gulf Coast. "The refinery will eventually stop (operations)", the source said.

The Caribbean terminals affected by the court orders past year were responsible for shipping about 400,000 bpd of crude and refined products, or 24 percent of PDVSA's total exports, according to the company's internal data.

In Bonaire, another of the islands affected by Conoco's actions, there is enough fuel to continue generating electricity for at least two weeks, said Caspar Itz, a spokesman for the Dutch Ministry of Economic Affairs.

Conoco's actions continue to force PDVSA, which was already struggling to export its oil amid falling output and a lack of maintenance, to change its trade arrangements to avoid further seizures of physical assets, tankers or the barrels aboard.

PDVSA has not responded to requests for comment.

In its first official comments since Conoco's actions started, Venezuela on Thursday suggested it was ready to pay the US oil company. The OPEC-member country's crude exports fell 29 percent in the first quarter compared with the same period of 2017 to 1.19 million bpd, according to Reuters data.

Venezuela has requested annulments or shown little willingness to pay recent awards, leading creditors to pursue its overseas assets as a form of payment. The Venezuelan firm has transferred custody over the fuel produced at the Isla refinery to the Curacao government, the owner of the facility, according to two sources with knowledge of the matter.

The Aframax tanker British Cygnet loaded crude at Russia's Primorsk terminal last month.

The British Cygnet follows at least nine vessels diverted since Friday from Curacao and Bonaire to Venezuela and Cuba to avoid possible seizures of tankers or their barrels, according to the PDVSA source and Reuters data.