The country is pumping more crude, yet tankers are spending weeks waiting offshore as a long-neglected infrastructure problem threatens its export recovery.
Venezuela’s outdated port infrastructure is effectively limiting the pace of oil exports despite rising production. Tankers are forced to wait up to 30 days for loading because of worn-out equipment, power outages, and problems with crude quality.
Port delays are complicating U.S. plans to rapidly increase supplies of Venezuelan oil following agreements with major traders. Competition for access to berths could intensify as partners of state-owned company PDVSA prepare to sell their share of production independently under new contract terms.
The last time customers of Venezuela’s oil industry faced such prolonged delays was during the naval blockade imposed by the United States late last year. It became part of a strategy that culminated in the capture of then-president Nicolas Maduro on January 3. Since then, interim leader Delcy Rodriguez has followed Washington’s plan to restore oil exports.
However, PDVSA and its partners have been unable in recent months to exceed export levels of 1.25 million barrels per day. This is happening despite increased production, lower accumulated inventories, and strong global demand for oil.
More than two decades ago, when Venezuela’s production exceeded 3 million barrels per day, the country’s terminals could handle more than 2.5 million barrels of exports daily. At that time, tankers would typically enter Venezuelan waters and depart in less than a week.
Current loading disruptions are fueling disputes over vessel demurrage charges, oil quality, and tanker contamination. The largest concentration of vessels is near the port of Jose in northeastern Venezuela, which handles about 70% of the country’s total oil exports.
The speed at which oil is pumped from storage tanks onto vessels is incredibly low, causing tankers to occupy berths longer than their scheduled loading windows allow. And if a vessel arrives to unload imported cargoes, the process takes even longer because of insufficient fuel storage capacity.
– PDVSA source
Throughout the year, the Jose terminal has experienced operational shutdowns due to equipment failures, crude-quality issues, and power outages during vessel loading and unloading.
Even Chevron, which has worked with PDVSA for decades and enjoys relatively favorable access to berths, is looking for ways to speed up operations. The company is seeking access, in particular, to ports that have so far been used mainly for domestic shipments.
Venezuela’s oil-export agreement with the United States, which was extended several times, enabled traders Vitol and Trafigura to ship more than 140 million barrels of oil and fuel this year. Most cargoes were headed to the United States, while some returned to markets in Europe and India, which had not received Venezuelan crude for years because of sanctions.
At the same time, the U.S.-proposed $100 billion plan for Venezuela’s energy reconstruction focuses primarily on increasing production. Repairs to port terminals, pipeline infrastructure, and refineries are not yet among the top priorities.
U.S. and Venezuelan officials at conferences in Houston this week gave a positive assessment of the recovery in exports, but acknowledged infrastructure problems. In their view, these can be resolved through new investment.
We are now at the recovery stage, but the infrastructure is there. There are shortcomings, and reliability needs to be improved.
– PDVSA Vice President Jovanny Martinez
Tanker queues, rust, and oil spills
Congestion at anchorage areas near Jose and neighboring Pozuelos began even before the current revival in exports. Venezuelan ports still contain vessels left over from the period of strict U.S. sanctions, including sanctioned tankers that arrived in the country unnoticed and later were unable to leave its waters.
One such tanker, sailing under a false Guyanese flag, is moored at PDVSA’s Guaraguao port in Puerto La Cruz. The vessel was previously named Syrma and carried oil to Cuba, but after being renamed Consul, it has remained in Venezuela for two years. It avoided intensified U.S. pressure on the so-called shadow fleet, which was accompanied by arrests and confiscations.
Such vessels occupy scarce berths at a time when foreign companies are trying to restore mothballed terminals to increase exports. In mid-August, only two of Guaraguao’s seven berths were fully operational.
The shortage of port capacity is forcing customers to make greater use of terminals and ship-to-ship oil transfer areas. Spills frequently occur in these zones, contaminating tanker hulls and causing additional delays and costs.
PDVSA is increasingly receiving bills for thousands of dollars in demurrage – an additional charge for each day a tanker remains idle after its allotted loading time has expired. The state company agrees to cover such costs only with oil.
New buyers must also pay for cargoes upon delivery, with no credit provided. This complicates settlements if buyers demand compensation for delays or discounts due to claims about crude quality.
The transfer of dozens of oil contracts to new terms approved as part of a major energy reform in late July could further intensify the struggle for access to infrastructure. At the same time, PDVSA plans, at least in the near term, to retain control over terminals and the schedules for all cargo operations.