Crisis at PDVSA deepens as Carib debts pile up
HOUSTON:
Unpaid debts and broken promises are making Venezuelan oil giant PDVSA an outcast in several Caribbean countries where it had been a guest of honor. The state-run company’s crumbling finances are causing operational disruptions across one of its most essential regions, according to internal company documents, six sources with knowledge of its operations, and Thomson Reuters vessel-tracking data.
Business partners in the island nations of Curacao, Bonaire, Jamaica and the Bahamas are turning away from the firm as debts pile up to tugboat operators, ship brokers, maritime agencies and terminal owners, the sources and documents show. The company’s problems include blocked loading operations in the Bahamas and threats from the governments of Curacao and Jamaica to replace PDVSA as a partner of refineries in both places. Many vessels are also anchored offshore, blocked from discharging cargoes at ports because PDVSA has not paid suppliers and business partners. The mounting Caribbean problems are adding to a broader crisis for PDVSA, which is already reeling from declining production, low crude prices and an unprecedented economic downturn at home. The company saw operating cash flow plummet by 63 percent, to $2.1 billion, in the first quarter compared to the same period a year earlier, according to its most recent financial report. PDVSA’s Caribbean operations represent a quarter of its global refining capacity and serve as a loading hub for a third of its exports of crude and fuel oil.
“PDVSA has absolutely lost ground in the Caribbean,” said Lisa Viscidi, director of Energy, Climate Change and Extractive Industries at the InterAmerican Dialogue in Washington, noting falling oil sales in the region for the past two years. PDVSA did not respond to repeated requests for comment. In the latest mishap, a PDVSA fuel-oil cargo bound for Asia has been trapped in the Caribbean sea for more than a month after a court ordered the detention of the tanker “Hero” in Curacao, according to sources with direct knowledge of the situation and Thomson Reuters vessel-tracking data.
Curacao’s port authority barred the ship from leaving on Sept. 18 after a unit of Core Laboratories won the court order to force payment of delinquent debts, according to two people with direct knowledge of the matter. PDVSA had allegedly failed to pay the unit, Saybolt, several million dollars for months of oil testing services. Mark Elvig, general counsel for Core Laboratories, declined to comment.
Reversal of Fortune
The problems reflect a stark reversal for a company that has been a trusted partner of governments in the Caribbean. About a decade ago, Caribbean countries laid out red carpets for PDVSA executives, who came offering cheap oil under the Petrocaribe program that leftist President Hugo Chavez launched to win allies as a bulwark against Washington. Petrocaribe worked well for years, as poor islands curbed the impacts of rising global oil prices and Venezuela bartered oil for everything from medical services to black beans. PDVSA had used Caribbean facilities to offset frequent outages and incidents plaguing its storage, refining and port networks in Venezuela. The region offers vast storage capacity, ample refineries and crude blending facilities, and deep water docks to load Very Large Crude Carriers (VLCC) for trips to Asia. But the relationships of the past are now increasingly strained as suppliers and service providers go unpaid.