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An imminent scenario in Venezuela

January 31, 2019 02:50
Updated January 31, 2019 2:53 PM

At the service stations in the east of Caracas, the queues returned to appear this week and it was not due to a shortage of gasoline, this time. The drivers filled their tanks in anticipation of the effects that the sanctions imposed by the US government could have on Petróleos de Venezuela.

"We do not know what will happen now. We are waiting," said a worker at a gas station at Rómulo Gallegos. "You have to be aware of the news to know what's going on," he added.

Restrictions on the oil sector announced this week that White House security adviser John Bolton may limit fuel supplies in the country.

"From the second half of December to the first half of January, mandatory gas purchases were made to the United States, enough to meet demand nationwide for a period of 10 to 12 days. There was a serious reduction in the number of vehicles in the country. If we had what was active in 2012, what was bought would only last 5 days, "explained Iván Freites, director of the Unitary Federation of Oil Workers of Venezuela and secretary general of the Union of Workers of Petroleum and Gas of Falcon .

The union leader added that, despite recent fuel imports, the deficit will continue in border areas due to smuggling. "We have a consumption of 190,000 barrels of gas per day and already last year we had a deficit of 60,000 barrels per day. The US import was 60,000 barrels. Now we do not have that gas or gasoline," Freitas said.

José Bodas, Secretary General of Futpv, said that the gas deficit is 2005.

The unionist said that US sanctions also affect fuel production in the country. "The sanction for the oil industry restricts the purchase of the necessary additives for the gasoline mixture to become suitable petrol for vehicles. We could not do gasoline."

The engineering and refining specialist Francisco Javier Larrañaga said that due to the deterioration of the Amuay, Cardón, El Palito and Puerto La Cruz refineries, high-octane gasoline is not being produced. "On the one hand, the sanctions restrict the currencies that could receive the illegitimate government of Nicolás Maduro and, on the other hand, we have a state of general deterioration of gasoline production. Cardón's cracking unit does not work," he said.

Weddings added that the Paraguaná Refining Complex operates between 20% and 25% of its capacity and, from there, it imports a large part of the gasoline that is distributed in the country.

Larrañaga emphasized the difficulty that Maduro will have to import gasoline from other parts of the region due to diplomatic tensions. "Latin American countries that could import this amount of gasoline to supply the market are breaking relationships with Maduro. These would be the closest countries to which they could buy."

Export in danger

The export of Venezuelan crude oil will also be affected by sanctions. "It will be difficult to send oil to other markets because our oil is heavy, with many sulfur and metal waste, which can only be bought by refineries with profound conversion processes," said José Toro Hardy, PDVSA's former executive.

The oil economy expert said that the only ones interested in buying Venezuelan oil, in addition to the United States, are looking to mix it with light crudes to achieve an average mix.

Despite the possibility that Maduro does not send more oil to the United States because it does not have access to the accounts with which they pay for exports, Toro Hardy believes that he does not have many options in the short term to replace the US market.

"It is possible that Maduro's decision is not to send more oil to the United States because who would have these resources will be Juan Guaidó," he said. He argued that the restrictions also affect the Citgo subsidiary, who would have to import oil at a higher price than other countries that provide heavy or extra crude oil such as Canada.

"Citgo can buy oil from other places, but never at the same price you get when you buy it from PDVSA and process it in the same refineries." The measure can also affect refineries of Valero and Chevron, who use Venezuelan crude.

Venezuelan production at risk

Rafael Gallegos, a former PDVSA worker, warned that the restrictions also affect oil production in the country, which has fallen in historical levels, according to the report by the Organization of Petroleum Exporting Countries.

"Although you can try to import diluents from other countries, you will have less money to buy them, so it can affect the production of the belt a bit," he explained.

Despite these warnings, Maduro reiterated that there is "gasoline for a while" in the country.

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