Venezuela looks abroad for fuel as domestic production wanes

HOUSTON (Bloomberg) -- Venezuela, home to the largest oil reserves in the world, is seeking to import 13 MMbbl of fuel this year as the country’s refineries are now operating at less than half of their capacity.

State-run oil company Petroleos de Venezuela SA is inviting trading houses and refineries to supply as much as 70,869 bbl of oil products daily from July through the end of the year, according to tender documents obtained by Bloomberg. The company is seeking gasoline, gasoline octane-enhancers, diesel, and also intermediary feedstocks such as vacuum gas oil and catalytic naphtha, which refineries use for fuel production. PDVSA is also seeking heavy naphtha, a diluent used mixed with its heavy oil so crude can flow more easily through pipelines and be sold or refined

The purchases account for about a third of the country’s oil products needs, estimated at 200,000 bpd, says Alejandro Grisanti, director of the Caracas-based consultancy Ecoanalitica.

“This volume should supply just part of the country’s needs this year,” he said. “PDVSA will certainly come back for more.”

PDVSA didn’t immediately return a phone or email seeking comment.

The Venezuelan government faces $3.2 billion in debt payments this year as the political and economic crisis escalates. Many are taking to the streets to protest against food shortages and galloping inflation. The turmoil comes as crude oil production, the main source of revenue, has sunk to a 14-year low.

PDVSA refineries in Venezuela are operating at less than half of their total installed capacity of 3.1 MMbpd because of a lack of crude oil, and as the company prioritizes debt payments over spending on maintenance, BMI Research said in a report.

Venezuela is in talks with Russia to renegotiate part of its debt as it failed to make payments on in 2016. The nation’s oil minister Nelson Martinez said in early June that Venezuela offered Rosneft stakes in four or six oil projects.