Page 9 - LatAmOil Week 23 2022

LatAmOil VENEZUEL A LatAmOil

Both Eni and Repsol did not respond to Reuters’ token presences in Venezuela. However, the
requests for comment. But Venezuelan Presi- waiver does not permit any of the companies
dent Nicolas Maduro sought to confirm reports to engage in upstream activities or supporting
of a resumption in oil shipments to Europe. He operations. ™
did not do so directly, though he did say in a tel-
evised address on June 4 that Washington had
given Eni and Repsol, as well as the US major
Chevron, permission to resume upstream activ-
ities in Venezuela.
“Steps are being taken, the first steps,” he said.
“About a week ago, the United States took small
but significant steps by granting licences to the
US company Chevron, the Italian company Eni
and Repsol.”
Maduro’s statements were not strictly accu-
rate. US authorities recently extended a waiver
that allows Chevron, along with four US-based
oilfield service providers (OSPs), to maintain Most European oil and gas companies have withdrawn from Venezuela (File Photo)

PdVSA orders filling stations to end

subsidy by pricing diesel in US dollars

VENEZUELA’S national oil company (NOC) Venezuela first began pricing fuel in US cur-
PdVSA has instructed more than 100 filling sta- rency in 2020, when the government of Presi-
tions around the country to begin selling diesel dent Nicolas Maduro authorised approximately
in US dollars, thus effectively undercutting a 200 filling station across the country to sell gas-
subsidy that had enabled drivers of trucks and oline in dollars.
public fleet transport vehicles to fill up their Because of the sanctions that the US gov-
tanks at almost no charge. ernment has imposed on the South American
Since late last year, Venezuela has been sell- state and PdVSA, it has become increasingly
ing diesel at a retail price of $0.50 per litre at challenging for Venezuela to secure enough fuel
most filling stations. However, it also offered to cover domestic demand. Consumption of
diesel priced in the local currency at certain cooking oil, diesel and gasoline has been steadily
locations that came to serve almost as a parallel returning to pre-pandemic levels. ™
supply network.
Since these stations were able to sell fuel at
below-market levels, they gained wide popular-
ity and long lines of vehicles became common-
place sights outside the fuel stations that made
use of the subsidy. As such, PdVSA decided that
the time had come to increase the proportion of
fuel stations selling diesel in US dollars.
According to documents and sources pro-
vided to Reuters, PdVSA communicated the
new dollar-denominated price for diesel to fuel
stations on May 26. “From now on, diesel will
be sold at the same price as gasoline,” one of the
people connected to the issue stated.
While the subsidy on diesel priced in the
local currency continues to be available, the
lines outside participating stations continue to
grow longer. As a result, fuel retailers are coming
under more and more pressure to switch to the
dollar-based system.
According to analysts’ estimates, the shift to
dollar-based fuel purchases is likely to lead to an
increase in freight tariffs and thereby drive infla-
tion further upwards. Fuel sellers are under more pressure to price diesel in dollars (Photo: NewsBeezer)

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