Cri­sis at PDVSA deep­ens as Carib debts pile up

Kuwait Times - - BUSINESS -

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.

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