Page 5 - LatAmOil Week 41 2022

LatAmOil COMMENTARY LatAmOil

The volumes involved have dropped even more turn out enough fuel to meet domestic demand,
sharply in the last three years. This is in large not just because of the decline in Venezuela’s oil
part the result of the US sanctions imposed in production levels but also because PdVSA has
early 2019, which have sought to discourage not been able to carry out all necessary repair
international oil companies (IOCs) and other and maintenance work.
stakeholders in the global energy industry from Once again, this is related to sanctions,
investing in or otherwise supporting Venezuela’s which have curtailed the NOC’s ability to work
petroleum industry. with its upstream partners while also prevent-
Officials in Caracas are reportedly eager to ing it from accessing the parts, equipment and
breathe new life into the group, though. A source technical expertise needed to repair refineries,
with knowledge of the matter told Bloomberg heavy crude upgraders, pipelines and other
last week that PdVSA, in a bid to revive Petrocar- infrastructure.
ibe, had started lobbying a number of Caribbean Venezuela has been able to reduce the impact xxxx
island states to negotiate deals for new oil and of the sanctions regime on this front by signing
fuel shipments. a series of agreements with Iran. Under these
The source did not name the states that were agreements, the first of which was finalised in
being targeted or the terms that were being November 2021, Tehran has been furnishing
discussed. However, Bloomberg quoted Ralph PdVSA with some of the things it needs most.
Gonsalves, the prime minister of Saint Vincent They include technical expertise, refinery
and the Grenadines, as saying that he expected equipment, petroleum product and lightweight
PdVSA to deliver its first new shipment of fuel blendstocks such as gas condensate that can be
under the Petrocaribe programme to the coun- mixed with Venezuelan heavy crude to make it
try by the end of October. The cargo will consist easier to process or export.
of up to 23,000 tonnes of diesel, said Gonsalves,
who has made it clear that he supports Venezue- Sanctions: The heart of the matter
la’s socialist aspirations. Even so, the South American country’s oil sector
Maduro, for his part, has also played up Pet- is still precarious. Crude production levels are
rocaribe’s role as a vehicle for Chavez-style social rising, but fuel shortages and supply disruptions
spending beyond Venezuela’s borders. “Sooner remain widespread.
rather than later we will recover Petrocaribe’s Under such conditions, it is difficult to see
investment capacity so that it fulfils its historic how Caracas might successfully revive the
role as a factor of social justice and stability in Petrocaribe programme, since doing so would
Latin America and the Caribbean,” he said ear- hinge on PdVSA’s ability to serve as a reliable
lier this year. supplier of crude oil and refined fuels. At the
same time, though, it is easy to see why cash-
Ambitions vs. ability strapped Caracas might be as interested now as it
These are lofty sentiments, but PdVSA will has ever been in collecting the debts owed by the
probably be hard-pressed to back them up with Petrocaribe group’s member states. (According
action unless US sanctions are lifted – or loos- to the Bloomberg report, the arrears amounted
ened sufficiently to permit oil exports to resume. to $6.5bn as of 2019.)
After all, Venezuela’s ability to export crude oil Whatever the case, the statements from the
and refined fuels is still severely constrained as a news agency’s source indicates that PdVSA
consequence of the sanctions regime, so PdVSA wants conditions to change soon and is ready to
is likely to face at least moderate difficulties in make promises to members of the Petrocaribe
trying to arrange additional tanker shipments, group. Nevertheless, the NOC’s ability to uphold
even to nearby countries. its pledges will continue to disappoint unless the
Additionally, Venezuela’s refining sector is US government makes a decision to loosen or
seriously compromised. It is currently unable to lift sanctions. ™

Left to right: Maduro and Gonsalves admire a portrait of Chavez (Photo: Twitter/VTVcanal8)

Week 41 12•October•2022 www. NEWSBASE .com P5