Exclusive: Venezuela's oil imports slump on payment woes, economic meltdown

Reuters ^ | August 25, 2016 | Marianna Parraga

[2ndDivisionVet]

Venezuela has not been able to import all the crude and fuel it needs this year to cover shortfalls at oilfields and refineries as state-run PDVSA struggles to pay suppliers on time, according to trade sources and internal company data seen exclusively by Reuters.

The decline is the largest in five years as the worst economic crisis in decades undermines PDVSA's ability to buy oil imports, which fell 21 percent in the first seven months of this year to 154,465 barrels per day (bpd), the data showed.

Venezuela is also on track to suffer its steepest annual oil output drop in 14 years after years of state mismanagement and under investment.

Risk-averse suppliers are refusing to discharge cargoes to cash-strapped PDVSA without being paid first, unusual in an industry in which buyers normally have 30 to 60 days to pay after delivery. Others have stopped dealing with PDVSA entirely as it resorts to bartering its own oil in swap deals, according to traders and a company source who was not authorized to speak publicly.

"We have no more access to purchases under any type of credit. We are importing under two mechanisms: prepayment and swap," said the source, who did not want to be identified....

[Enterprise]

This is really all so simple to resolve. Maduro’s political officers only need to gather all the workers and executives and give rousing speeches about the glories of Socialism. I’m sure they will be inspired to double their efforts and quickly help the economy rebound.

[RightGeek]

[ConservativeMind]

Venezuela simply needs to print a bunch more currency and pay everyone with it.

This is easy. Use Zimbabwe as the example to follow.

[HiTech RedNeck]

They set up a socialism based on a single-product export that was nationalized, not private.

That rides high as long as the export rides high. But when it doesn’t ride high... OH NOES! OMG!

[cloudmountain]

It’s a CLUSTER F..., as Gunny Highway would say.

[HiTech RedNeck]

And I can’t help but be a little contrarian. Alaska state currently pays out to its citizens a dividend from its state owned mineral income. Its people are in a position like this, though writ small (Alaskans do other capitalist things to earn their keep, which Venezuela is not).

Anyhow, Venezuela needs to diversify. That should be screamingly obvious now.

[Enterprise]

The problem for Venezuela is that they CAN'T print more money. Their money is printed outside of Venezuela, and they can't afford to pay for it. Perhaps they can get some cartoonists to draw some for them.

[Vince Ferrer]

Alaska is in a lot better shape because of its dividend that goes out to each citizen, rather than in most oil producing countries where the money is spent by the leadership in order to stay in power.

[TexasRepublic]

What Venezuela needs is more socialism. Yeah, that’s the ticket!

[HiTech RedNeck]

As long as the leadership is honest and has reasons to stay honest, this would be the case. But let cheating gain a foothold anywhere, and such a system quickly feeds it.

[Wilhelm Tell]

I noticed a CitGo gas station in town has changed brands - the CitGo signs were all down. I wonder how common that is. I seem to remember that 10 or more years ago there were several CitGo stations in town and it looks like they have all either changed brands or closed down completely.

Ah, the wonders of socialism when even Venezuela cannot produce enough oil.

[HiTech RedNeck]

They always had to trade some of their oil for world oil, because it was sour crude that was more difficult to refine.

When world oil demand was large enough that even their sour crude was welcome, they were in fat city.

[Kickass Conservative]

Venezuelan Crude is very Heavy. They have to mix it with better quality Light Crude to make it marketable.

They have vast Reserves, but by itself it is very difficult to Refine.

They need to Import the better quality Crude to make their own Product usable. No Money, no Imported Light Crude.

[HiTech RedNeck]

Heavy, and sour too (high sulfur content). They could let their customers be concerned about mixing their product, but their own refineries need it too.

[DoughtyOne]

Evidently Venezuela is Pickles' model society...


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[DeFault User]

This is definitely a job for Sean Penn and his keen intellect. I wonder if he still has the boat, which is a rather appropriate metaphor for the Venezuelan economy....a vessel with a large hole in it, skippered by an idiot.

[cherry]

but the “authorities” in Alaska would sure love to stop paying back to its citizens....all they need is the right mix of rats in there and that permanent fund will be gone...

[aces]

why go so far, looks like the USA

[Pontiac]

Risk-averse suppliers are refusing to discharge cargoes to cash-strapped PDVSA without being paid first, unusual in an industry in which buyers normally have 30 to 60 days to pay after delivery.

Not unusual for companies that have been stiffed by the buyer before.