A tanker’s collision with a dock at Venezuela’s main export terminal will reduce crude exports in September by up to 400,000 b/d, more than one third of the country’s exports. India could see the largest reductions. Whether this disruption will last into October is unclear.
India likely to face the biggest reduction
The damaged dock at the José terminal typicall exports Venezuela’s heaviest export blend, mostly to India. We anticipate that India will receive significantly less crude this month, but that PDVSA will also send less to the US and China, the other primary destinations for the country’s crude. The exports to India are sent under contract with Rosneft, as part of an oil-forloans
By year end, we expect Venezuela’s crude production will have fallen by 600,000 b/d, from 1.6 million b/d in January to 1 million b/d in December. This decline has forced PDVSA, under various obligations, to choose where to send its limited exports. Recently it has decreased exports to China, while continuing to send crude to India and the United States at stable
rates. Exports to China have fallen from above 400,000 b/d to below 200,000 b/d. US refiners have received an average of 500,000 b/d in recent months, while India’s refiners have received 300,000 b/d.
We expect the accident to reduce September exports to India by 200,000 b/d, to 100,000 b/d; to China by 100,000 b/d, to 100,000 b/d; and to the US by 100,000 b/d, to 400,000 b/d. PDVSA is diverting tankers to the nearby Puerto la Cruz terminal, but it is unclear how quickly crude will be loaded there.
The country’s four upgraders, which process crude from the Orinoco Belt and feed into the José terminal, have been, variously, under repair since June. This has increased Venezuela’s exports of diluted crude oil and reduced the overall volume of exports by 100,000 b/d to 200,000 b/d.
Meanwhile, damaged refineries have freed up more crude for export. Refinery throughput remains low, near 300,000 b/d, and many of the upgrading units are damaged and in need of repair. For some of the upgrading units that have been repaired, appropriate feedstock, especially VGO, has not been available. The low throughput rates have tightened the
supply of fuels domestically but allowed the company to export a larger share of its falling crude production.
The 400,000 b/d reduction in exports is likely to continue through September, but repairs could carry over into October, lengthening the delay and putting pressure on storage tank capacity around the terminal. If those tanks were to fill up, PVSA would likely shut in production in the Orinoco.