With the resumption of oil shipments to Europe, PDVSA increased its sales in June and July, with global exports reaching 545,000 barrels per day in the 60-day period. But now the state company is not interested in oil-for-debt deals. Former Minister Rodrigo Cabezas evaluates the decision
The economist and former deputy Rodrigo Cabezas pointed out that Nicolás Maduro’s decision to suspend the shipment of crude oil to Europe for the oil debt with the companies Eni and Repsol, from Italy and Spain, respectively, means a breach of the agreement previously established between the United States, the European oil companies and the Chavista government, which, in his opinion, increases the legal uncertainty to make business with Petróleos de Venezuela (PDVSA).
“Regardless of being or not in favor of what was agreed (….) this decision to not comply with it represents the ratification of the legal uncertainty that prevails in the national oil industry. It is the absurdity of the absurdity in the oil business. Every day they are in charge of driving away new and necessary investments (…) In the short and medium term it is not possible to see an operational recovery, due to massive investments, administrative, managerial and ethical of PDVSA, “said Cabezas.
The pact between the parties, which involved the US State Department, meant the relaxation of the US sanctions applied to the Venezuelan state company, which in May of this year was authorized to resume its shipments to Europe, after two years without being able to do so. for these measures. One of the conditions was that cargo revenues would be used to pay off PDVSA’s accumulated debt with joint ventures with Eni and Repsol.
*Also read: PDVSA suspended shipments of crude oil due to debt to Europe
«This debt increased with the impossibility of selling crude oil by the mixed oil companies as a result of the North American sanctions in 2019. Its exact amount, which affects Total, Shell, Repsol, ENI, Chevron, Equinor, CNPC of China, ONGC of India, among the main companies, is not known. PDVSA has not delivered its audited financial statements since 2016, submerging itself in a total lack of transparency,” explained the also professor at the Central University of Venezuela.
Regarding the demand of the Maduro administration to request that the European oil companies provide fuel in exchange for future shipments, the former Minister of Economy of Hugo Chávez considered it “absurd”, raised the question of what PDVSA will do with the barrels of crude already compromised and wondered if “they dare to hold them”.
Since June, Eni has received a total of 3.6 million barrels of Venezuelan diluted crude (DCO), according to PDVSA documents and tanker tracking data. Most of that volume was later delivered by Eni to Repsol, which has greater capacity to refine the South American country’s heavy sour crude grades.
With this resumption of oil shipments to Europe, PDVSA increased its sales in June and July, with global exports reaching 545,000 barrels per day (b/d) in the 60-day period. Now, with the restructuring of the agreement, the Venezuelan company could reactivate its extra-heavy oil operations in the Orinoco Belt, which need imported diluents such as heavy naphtha, and alleviate the nation’s motor fuel deficit.
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