Venezuela’s PDVSA freezes most oil exports for contract reviews

Venezuela’s PDVSA freezes most oil exports for contract reviews

17 Jan    Finance News, PMN Business, REU

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HOUSTON — The new head Venezuela’s state oil company PDVSA has suspended most oil export contracts while his team reviews them, according to an internal document seen by Reuters and two people familiar with the matter.

The freeze is leading to port delays, as vessels that were loading have been sent away and are waiting for new directions, the people said.

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New Chief Executive Rafael Tellechea last week wrote to the heads of the company’s divisions of supply and trade, domestic market, international market, finances and foreign affairs and notified them of the contract suspensions. The letter did not specify how long the freeze would last.

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Tellechea was appointed on Jan. 6.

The suspension so far has affected little known firms that act as middlemen in PDVSA’s sales to Asian refiners. Cargoes chartered by U.S. oil firm Chevron Corp and Cuba’s Cubametales have not been affected by the contract revision, according to separate documents and the sources.

As of Jan. 17, most berths at Venezuela’s main oil terminal, Jose port, were empty after vessels were moved away while awaiting further directions. At other terminals, ship-to-ship operations were interrupted and some customers were instructed to prepay their cargoes entirely before delivery, the people said.

PDVSA’s previous administration last year had imposed new contract terms to its spot customers, demanding prepayment of a least half of the cargoes’ value in a move to avoid tankers set sail without proper payment, a situation that has hit its finances in recent years amid U.S. sanctions.

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Venezuela’s oil exports last year declined 2.5% to 616,540 barrels per day due to infrastructure outages, U.S. sanctions and rising competition in its key Asia market despite assistance from ally Iran, according to shipping data and documents.

(Reporting by Marianna Parraga Editing by Marguerita Choy)

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