The global oil producer and exporter has offered technical reasons for its purchase
The arrival of a shipment of crude oil from Algeria to Port
of José (Anzoátegui state, northern Venezuela) caused the kind of
commotion that could be expected were France to receive a shipment of
bubbly destined to be mixed with its famous champagnes. “A day of
infamy,” was how it was described by Damián Prat, a columnist who
supports the political opposition.
Just when Venezuela – the world’s largest producer and
exporter during a good part of the 20th century, and one of the founding
members of the Organization of the Petroleum Exporting Countries (OPEC)
– was celebrating 100 years in the oil industry, it began importing
again. The South American country also imported oil from Nigeria in the
1990s.
These recent purchases of light crude oil from Algeria and
Russia – two of the regime’s international allies – are down to
technical reasons. The extra heavy crude oil from the Orinoco Belt, the
largest reserve in the world, provides for a growing percentage of
Venezuela’s exports. But this crude oil, which was first thought to be
bitumen before it was recognized as oil on international markets, has to
be diluted at so-called “upgraders” for distribution and refinery.
Even though the purchase has a technical justification, PDVSA officials hesitated over whether to announce it publicly
The main upgrader in the country is Petrocedeño, an entity
controlled by Petróleos de Venezuela (PDVSA), the state-owned oil
company. Petrocedeño, Norway’s Statoil and France’s Total will freeze
all activities in the next few days as they go through maintenance
operations. According to the Venezuelan government, these operations
created the need for imported light crude oil, which is necessary to
prepare shipments for export.
Even though the purchase has a technical justification,
PDVSA officials hesitated over whether to announce it publicly. They
knew that it would offer a bad image of an industry vital to the health
of the Venezuelan economy, especially when there have been doubts about
its management of late. Production is dwindling and the industry is not
going through the best of times. PDVSA has not found any buyers for its US-based oil refinery network, Citgo, and it had to deal with a light oil leak on the shores of Falcón state (northeast Venezuela).
PDVSA is the great financial investor and, often, the
manager of the state welfare programs that have given the chavista
regime such good electoral returns since 2003. The current currency shortage
facing the government of Nicólas Maduro is little more than a
reflection of the hardships the oil company, the largest Venezuelan
exporter, faces.
The company only announced the arrival of the shipment last
week, when the tanker Carabobo, which departed from the Algerian port
of Bejaia with two million barrels, was already near Venezuelan shores.
In August, Reuters published a story from Houston, Texas – a hub of
activity for the international oil industry – revealing negotiations
being held between Algeria and Venezuela. President Nicólas Maduro
accused the British news agency of “a campaign to destroy Venezuela.”
In a statement published on October 20, PDVSA said the
talks were about “possible” future purchases. Some experts, however, say
these imports underline important weaknesses in the country’s oil
industry, which in turn put its chances of recovering from the economic crisis
in danger. Light crude oil production in Venezuela is said to be almost
marginal due to lack of maintenance at the oldest wells.
Strategic alliances with companies from various countries –
Italy, Vietnam, Russia, and China – have led to considerable
investments in the Orinoco Belt, and these reserves will supply the
market with fresh barrels. But the country does not have the capacity to
upgrade that extra heavy crude oil.
Although PDVSA usually mixes its crude oil with naphtha, a product
derived from petroleum, it has stopped producing it. Instead it buys
from abroad. Now the company saves money on naphtha by importing light
crude oil but it has also grown more dependent on foreign providers.
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