He has tried everything. He changed the oil industry’s senior management, not once but several times. He launched “offensives” to reactivate PDVSA. He has traded gold in exchange for technical assistance and crude in exchange for refined products. But nothing has worked. The regime of Nicolas Maduro has been incapable to provide fuel for Venezuela’s shattered economy.
The former South American energy powerhouse has proved reserves amounting to 303,805,745 million oil barrels, as well as 200,325,484 million cubic feet of gas.
Venezuela’s infrastructure for oil production, refining and trade was once an international benchmark.
Its population is slightly under 30 million people, of which around 5 million have emigrated in the past years. Moreover, its economy is partially paralyzed.
20 years of socialist government have achieved what once seemed impossible. Venezuela is struggling with shortages of gasoline, gas, and electricity. It is like a shortage of sand in the Sahara Desert like Winston Churchill once said.
Iran to the rescue
Five tankers were recently loaded in Iran and sailed off from the Mediterranean to Venezuela. The first of these vessels is the Iranian-flagged Fortune, which is followed by the Forest, Petunia; Faxon, and Clavel tankers, according to the tracking data.
These tankers are carrying 1.5 million barrels of fuel. This amount of fuel would cover just 20 days of fuel demand, even with the current lower consumption; and just two days under normal circumstances, as interim president Juan Guaido said in an interview with Washington Based Inter-American Dialogue.
For its part, Iran warned the U.S. not to intercept its vessels last week. The threat was reiterated on Wednesday by Maduro’s ambassador Samuel Moncada during a UN Security Council meeting. The official described any attempt to block the shipment as an “act of war” and a “crime against humanity”.
Washington and the Venezuelan opposition have claimed that these Iranian gasoline supplies were paid with gold. The first tanker arrived at its destination on the weekend.
Lower refining capacity
Venezuela’s severe fuel shortage has disrupted the distribution of food and medicines. This situation means the country is even more exposed during the COVID-19 pandemic.
In a flourishing black market, rationed fuel can be sold at up to $4 per liter to desperate drivers. Before the United States imposed sanctions on Venezuela in January 2019, the country acquired petrol and components from U.S. refineries.
Meanwhile, Iran and China are helping Venezuela repair its 1.3 million bpd refining system. These refining facilities are paralyzed after years of negligence and corruption. The situation has worsened with the U.S. financial and oil sanctions.
A week ago, PDVSA announced it had partially reactivated a delayed cocker unit with a capacity of 70,000 barrels per day that had been paralyzed for over a year, at the Cardon refinery, which had an overall capacity of 350,000 bpd.
Cardon is part of the CRP refining complex, with a capacity of 940,000 bpd that also includes the Amuay refinery (635,000 bpd).
The state-owned company has been working to repair the complex with the help of Iran and China, in an effort to meet domestic fuel supply. Iran is also sending gasoline shipments, expected to arrive next week.
Amid disruptions to fuel supply, Venezuela is also facing a possible drop in domestic gas supply.
In addition to the long lines in all service stations waiting for gasoline, it is more and more common to see big groups of people at the gas distribution points in small towns.
The Executive Manager of the Oil Workers Union of Venezuela (FUTPV in Spanish) Eudis Girot warned of a possible shortage of domestic gas, resulting from the halted operations at the Complejo Industrial de Jose plant, which supplies the entire nation.
NO HAY GAS EN PDVSA. Planta fraccionamiento criogénico José que surte gas domestico todo el país paralizada.
Largas colas de gandolas para cargar combustible.
Se recomienda al pueblo uso racional del gas.
Situacion dramática, plantas d extracción operan al mínimo.
NO HAY GAS!! pic.twitter.com/yVSE3muFcQ
— Eudis Girot (@EudisGirot) May 16, 2020
Poor management and corruption at the state-owned company in recent years have led to the collapse of its refineries. As a result, Venezuela’s fuel production has disappeared.
For months, the Venezuelan government found a way to get around the problem by trading crude oil for gasoline, especially with Russian Rosneft.
However, in February and March the Trump administration announced new sanctions against Rosneft’s subsidiaries. In the end, the oil company suddenly announced its exit from Venezuela.
Additionally, and also due to the inefficiency and corruption in PDVSA, the nation’s oil output has plummeted. According to OPEC secondary sources, last month the country only produced 622,000 bpd.
In March, it produced 660,000 bpd, down from the 760,000 bpd recorded in February. Before the arrival of the Bolivarian socialism, PDVSA produced 3.27 million barrels per day. It also supplied the Venezuelan domestic fuel market.
For more information, check Energía16