Venezuela’s state-run oil company, PDVSA, has for months been unable to deliver the shipments of crude and fuel in a timely manner under oil-for-loan deals with China and Russia. According to analysts, the failure to ship oil to such important trading partners, which have together provided Venezuela with at least $55 billion in credit, shows how frail PDVSA is operationally. The problems causing the delays range from refining outages and delayed cleaning of tanker hulls to financial disputes with service providers who are owed money by PDVSA. As a result, a total of 45 cargoes bound for Russia, ordered by Rosneft, and China, booked by PetroChina and ChinaOil, are running late.
Since oil accounts for almost all Venezuela’s revenue, the delayed cargoes have a crippling impact on the country’s socialist economy. Cargoes to Russia and China are especially critical for Venezuela’s financial health because both firms buy about a third of the country’s total oil and fuel exports. President Maduro has for a long time relied on credit from these two countries to finance social investment and infrastructure. PDVSA’s own failures thus extend to ordinary Venezuelans who are suffering under food shortages and triple-digit inflation. Reuters estimates that the total worth of the late shipments is about $750 million.
At the end of January, the Venezuela’s state-run oil company was late on almost 10 million barrels of refined oil products and derivates that it owes the Russian and Chinese firms. Shipments are delayed by nearly 10 months and on top of this amount China’s China National Petroleum Corporation has not obtained its 3.2 million barrels of crude shipments in time either.