***OIL
Crude oil production is down to 190.000 barrels a day (6% of total output) from a normal average production of 3.2 mm, (Occidental area 145.000, Oriental area 25.000 and South area 20.000). It is noteworthy that the Oriental area is where most of the foreign oil companies operate holding joint exploitation contracts, including synthetic oil and Orimulsión. Local consumption (Domestic market) represents 270K barrels/day.
Gas production is down by 80%, current levels being used basically to generate electricity and for household consumption (note that gas pressure in the domestic pipes was down by 15%). Some rural areas are already using wood and coal to prepare food, while waiting lines in metropolitan areas average 2km.
Fuel: Gasoline stored in the Paraguana complex (Cardon and Amuay refineries, the world's largest) might grant 20 days supply of national consumption (around 40 Mm barrels), at the same time, this inventory does not allow the refineries to operate for lack of additional storage capacity. One tanker was partially loaded by the end of the week with some difficulty due to shortage of qualified manpower. It is a well-known fact that the complexity of these refineries makes them not available for production in the short term.
The El Palito refinery was positioned as a symbolic figure and the Government is focusing all efforts and manpower into its start up, however there are several difficulties to overcome in order to succeed.
PDVSA refineries located abroad: Isla in Curaçao, closed operations December 29th, and will require at least 15 days to get restarted. St. Croix refinery is in full operation.
Gasoline distribution seems to worsen the problem on a daily basis. There are difficulties in the Andean region, gasoline is being smuggled from Colombia and sold at 14 times its current price in Venezuela. Caracas is being served from the Guatire reservoir, yet this terminal and its pipelines were contaminated when at the peak of the crisis, the Government pumped more than 200.000 barrels of Catalytic Nafta in order to pump out the gasoline inside the pipes. There is an existing black market in major metropolitan areas selling gas at $1 per liter (v. standard market price of $0.06 per liter) and the danger of accidental death due improper gasoline storage in jerry-cans has already occured.
This last weekend clean gasoline was pumped in again without purging the pipelines. The resulting mixture of gasoline and nafta will be distributed with the high risk of engine damage. (Explosion grade of gasoline is lower than nafta - nafta is a primary derivative of crude refining, needing additional refining plus the addition of derivatives to obtain gasoline. Additionally, the usual quality control of gasoline is not being conducted, and damage to vehicles is expected to happen). The Central region, Maracaibo, Oriente and Guayana areas are being hit the hardest by the fuel shortage.
It is noteworthy that only around 40% of available tank trucks are operating, most of them in an illegal manner, since they were confiscated "de facto" by government supporters. The available fuel, in no manner, covers distribution needs.
Crude Exports: For reference, please note that regularly, around 240 to 260 vessels are used to move oil exports from Venezuela. During the current strike, only 6 have been dispatched (carrying around 4.5 mm barrels). There are 27 vessels in the bay, an additional 17 have refused to enter Venezuelan ports and 4 are either loading or unloading (Vessels positioned in non operating terminals: Puerto La Cruz B/7 O/2, Jose B/1, Criogenico B/1, Puerto Cabello B/2, Cardon B/3, Amuay B/6, Tacoa O/1 Catia la Mar B/1, Carenero O/1, Bitor and Petrozuata none, Bajo Grande B/1, El Palito B/1 - B: moored in bay, O: in operation, None no vessel in port). It is noteworthy that PDVSA's own ships carried 90% of the operation and these are being operated under armed military supervision, which adds danger to the critical operation.
Operations - production and refining facilities are closed in all the Oriente Areas and also in Tia Juana, Paraguana and El Palito. Petrochemical plans are also closed. All facilities, nationwide are under military control.
Brazil' s elected President Lula ordered Petrobras to supply Venezuela 450.000 barrels of unleaded gasoline - one day national consumption, in what may be interpreted as a rescue operation. However, considering Venezuela's economic rating, including the fact that PDVSA' s rating was downgraded, Petrobras, not willing to assume political risk, requested payment in advance, prior to unloading. This support has resulted in demonstrations at the doors of the Brazilian Embassy, and society is calling for a boycott to all Brazilian made products.
It is worth to notice that the equivalent to 10 tankers is required just to fill in empty gas stations' tanks and after that, one tanker daily to support demand.
PDVSA is hardly hit by the actual situation. December sales of over $1.2 Bn to foreign markets are not made, the revenue of local sale of gasoline did not enter PDVSA' s bank accounts because gas was sold on cash basis to pumps without invoices, (the Army personnel, truck drivers and pump operators negotiated the operation to their personal interest and benefit), an additional loss will be incurred by the sale of the imported gasoline at below cost prices, which may not even be collected. (There are no administrative control over sales)
The problem is compounded by the fact that PDVSA's receivables, including December invoicing which was a zero, were sold for cash in order to sustain the liquidity of the Government.
In order to reach November 30th production level PDVSA needs at least 4 months (the expiry of substitution contracts signed by their customers to other vendors, work over of wells, which by the suspension of production will clog requiring repair and maintenance, etc.)
It is expected that PDVSA will not meet payroll payment due at the end of December, which will add to the workers unrest.***