Page 5 - DMEA Week 24

DMEA COMMENTARY DMEA

few independent firms to sell premium motor problems with the distribution of the gasoline
fuel. that has remained in Venezuela. Argus Media
Maduro’s government probably did not take described initial efforts to spread the fuel around
these steps without some trepidation, given that the country as “chaotic” on June 5. It also said
the country’s last attempt to reduce gasoline sub- that the Iranian supplies had started running out
sidies in 1989 did not go well. Instead, it led to quickly because demand was so strong that driv-
a violent uprising now known as the Caracazo. ers were trying to buy as much fuel as they could.
But as Reuters noted on June 7, Venezuelans
do not seem to have too many objections to the Potential for discontent
new strategy – at least not yet. Instead, they are Under these circumstances, the political opposi-
queuing up to buy fuel at the higher (but still tion’s promise to act quickly to reverse the short-
subsidised) rates from regular filling stations ages may start to sound more enticing.
or heading to less busy sites where they can pay Earlier this week, the opposition claimed in
world market rates for gasoline without running its new fuel supply strategy, called Plan Pais, that
up against the monthly quota system. it was capable of restoring regular and adequate
supplies within just two weeks. If Maduro steps
Available quantities down in favour of Guaido, it said, the latter will
It remains to be seen whether attitudes change, be able to work out a swap deal with PdVSA’s
and if so, how quickly. There is reason to believe US-based subsidiary Citgo. The swap would see
that they will change, though. PdVSA supplying crude oil to Citgo in exchange
Not all of the gasoline brought in from Iran for deliveries of refined petroleum products,
will be staying in Venezuela. Argus Media last in quantities large enough to meet domestic
week cited three PdVSA officials with knowl- demand and also to load up storage facilities, it
edge of the matter as saying that some of the explained.
fuel was being transferred from Venezuela to According to Plan Pais, this strategy would
Cuba. help ensure that Venezuela received enough gas-
According to the sources, PdVSA has set oline and diesel to keep covering demand until
aside about 100,000 barrels of Iranian gasoline PdVSA’s two largest refineries could be brought
for Cuba. They told Argus Media on June 5 that back online. These facilities, the 635,000 bpd
the Carlota C, a Cuban-registered vessel also Amuay plant and the 305,000 bpd Cardon plant,
known as the Maria Cristina, had docked at El are badly in need of repair. PdVSA has not been
Palito, Venezuela, in preparation to transfer the able to fix them and restore them to regular oper-
gasoline into its tanks. Shiptracking data show ations because the US sanctions regime limits
that the ship’s previous port of call was Moa, its access to parts and equipment. As a result,
Cuba. PdVSA has used the vessel before to move domestic petroleum supplies have become
Venezuelan crude oil to Cuba. extremely unreliable.
So far, Caracas has not said exactly how much The problem with this strategy is that it hinges
Iranian gasoline PdVSA has received. But if the on Maduro’s removal from office – and there is
company is diverting 100,000 barrels from the no sign yet that Venezuelans are ready to take
total for shipment to another country, it fol- this step. Even so, if the Iranian gasoline runs out
lows that there will be less available for sale to quickly and Caracas cannot easily secure more,
Venezuelan drivers, who have already endured discontent may rise – especially in the face of the
months of shortages. opposition’s promises to make the shortages a
At the same time, there are also reports of thing of the past. ™

Week 24 18•June•2020 www. NEWSBASE .com P5