Page 5 - LatAmOil Week 33 2022

LatAmOil COMMENTARY LatAmOil

Company representatives clarified during Venezuela.
the presentation that the influx of Venezuelan (This is primarily relevant to Washington,
crude had helped compensate for the slump in which has gone to greater lengths than any other
Russian feedstock deliveries following the latter’s party to isolate Caracas, especially since the dis-
invasion of Ukraine. Imaz, meanwhile, indi- puted elections of late 2018, in which President
cated that he expected the new arrangements to Nicolas Maduro was re-elected under dubious
continue for some time, saying: “It seems to me and disputed circumstances. However, it also
we are entering into a new dynamic relating to relates to the EU and other organisations that
Venezuela.” have imposed restrictions on trade with Vene-
These expectations have turned out to be zuela and with Venezuelan companies.)
premature. Because the sanctions were imposed as
punitive measures in response to allegations
PdVSA wants fuel now of political repression and election fraud, they
Three sources familiar with the matter told Reu- will probably not be eliminated unilaterally or
ters last week that PdVSA was now looking to all at once. Instead, they are likely to be lifted via
alter the deal. The Venezuelan company is no a process involving multiple rounds of negotia- PdVSA’s shifting
longer interested in swapping crude oil for debt tions, and the negotiations are likely to involve
coverage and now wants to exchange crude oil long discussions about quid pro quo – that is, responses to Eni
for petroleum product supplies, they said. about what each side is willing to give (or where
“PDVSA wants to go back to oil swaps, and it is prepared to give in) so that it can get at least and Repsol ought
that is not possible yet. There’s zero interest [in part of what it wants. Those involved in such
Caracas] in the oil-for-debt deals,” said one of discussions ought to have the goals of reaching to be taken into
the sources, who has previously been involved in a mutual agreement and making the terms of consideration by
Venezuelan crude shipments to Europe. that mutual agreement clear and transparent to
The source’s comments appear to be in line all sides. any party that
with PdVSA’s shipping schedules. According
to Reuters, the Venezuelan company has not Reliable partner? seeks to discuss
assigned any shipping windows to Eni or Repsol It is not clear whether the US and Venezuela met sanctions relief
at all for the month of August, even though it has these conditions with respect to the oil-for-debts
plenty of supplies available for this purpose. (As swap. with Caracas
of August 8, the news agency explained, PdVSA’s If they did not – that is, if Washington
inventories of crude oil at storage facilities in the authorised the resumption of oil-for-debt swaps
Jose port stood at nearly 5mn barrels.) without reassurances that Caracas intended
The NOC’s change of course makes sense, to follow exactly that course – then there was
in that the need for fuel is arguably even greater plenty of room for doubt about PdVSA’s willing-
than the need to pay off past debts. Venezuela is ness to continue supplying Eni and Repsol crude
suffering from widespread shortages of petro- on those terms.
leum products, and PdVSA’s refineries are Moreover, under such circumstances, the
in no condition to meet demand, as they are European majors should have been more dil-
underperforming following years of inadequate igent about their own due diligence process
maintenance and repair. (Its El Palito plant, for before building up expectations about future
example, recently had to divert Iranian crude oil feedstock supplies – and they ought to plan
intended for use as a diluent to another refin- accordingly for the future.
ery because its faltering machinery could not But if they did – that is, if Washington did
cope with the relatively high acid levels of the change its policy with the understanding that
feedstock.) Caracas had committed to following exactly
that course – then the Venezuelan side’s abrupt
Past performance and future results change of course ought to be remembered in
However, PdVSA’s shifting responses to the future. In other words, those involved in negoti-
European companies – and, by extension, to the ations with Venezuela on the lifting of sanctions
change in US policy – should be taken into con- might want to discard any assumptions that
sideration by any entity that thinks to attempt PdVSA and its patrons in Caracas will behave in
in the future to negotiate an end to sanctions on a predictable manner. ™

(Photo: PdVSA)

Week 33 17•August•2022 www. NEWSBASE .com P5