PDVSA Changes Oil Deals to Include Shipping as Sanctions Bite

Venezuelan state-run oil firm PDVSA has begun offering to ship its own oil, figuring in the costs in crude supply deals to help customers who have struggled to hire vessels to carry the country’s oil due to U.S. sanctions, according to company documents seen by Reuters.

The United States has blacklisted vessel owners, shipping operators and threatened to sanction any tanker facilitating the country’s oil exports as it tightens restrictions on trade with the South American country.

Washington has been trying to weaken socialist President Nicolas Maduro by choking the OPEC member’s oil exports, depriving the government of petrodollars — its main source of revenue.

Most shipping firms are avoiding Venezuela because of the sanctions, making it difficult and expensive to hire tankers to load crude there and helping drop the country’s oil exports to their lowest in nearly 80 years.

PDVSA has agreed since at least April with both long-term and new customers to oil deals that make the state firm responsible for transportation costs, and sometimes customs fees, according to internal documents from the state company seen by Reuters.

In previous deals, buyers sent ships to Venezuelan ports to load the crude.

“We are starting to use our own fleet and controlled fleet,” a PDVSA executive told Reuters.

Under the new deals, buyers designate the port for delivery and PDVSA is responsible for getting the oil there, according to the documents.

The strategy, also used by other countries under U.S. sanctions such as Iran, could be short-lived if PDVSA is unable to gather enough vessels.

Of the more than two dozen vessels PDVSA controls, only four have valid classification and insurance, according to company and shipping sources.

Aside from some short trips to Cuba, most of PDVSA’s tanker fleet has stayed in Venezuelan waters for the last year because sanctions have left them lacking the insurance or certification needed to navigate international waters, or because they are unseaworthy.

Some vessels no longer have operators because PDVSA failed to pay the firms that managed the vessels and crews.

Germany’s Bernhard Schulte Shipmanagement returned over a dozen vessels to PDVSA in 2019 after the Venezuelan firm failed to pay fees due for managing them.

Other ships need maintenance. PDVSA has struggled to get the work done because it cannot get needed parts or afford to pay for the work. The company has also faced lawsuits and seizure attempts by foreign shipyards that did repairs.

maritime professional