HOUSTON/CARACAS- OPEC member, Venezuela raised the prospect of declaring forces majeure on contracts crude buyers amid plummeting output from its oil fields and tanker bottlenecks at ports, according to three sources familiar with the matter.
Oil is the financial lifeline for the socialist government, President Nicolas Maduro, but his cash-strapped administration has failed to invest in the industry to prevent the breakdown.
Venezuela’s state-owned oil firm, PDVSA told to some customers that they must have to send vessels equipped to accept ship-to-ship oil transfers than to load at its ports. If customers do not accept the terms, the company is considering force majeure, with essence declaring all its contracts incapable of being fulfilled.
The separate notification is being provided by the company to all its customers that company will no longer receive any new tankers for loading at Jose or Paraguana, its main export terminals until then ships already in line.
PDVSA has been using sanctions imposed on the company by U.S. President Donald Trump as a rationale for the change, according to one of the sources.
Customers have refused the ship-to-ship transfer request due to the lack of a third party supervising the operations so far. According to traders, Additional costs for completing the transfer are also contributed to the refusals.
More than 70 tankers off the coast of Venezuela on Tuesday, according to Thomson Reuter’s vessel tracking data.
The source familiar with the matter said. “We are going to try the ship-to-ship idea first”. It also added referring to fees charged for long waiting times, “Many customers are going to prefer this than continuing to accumulate demurrage”.