UPDATE 2-Citgo seeks crude as supplies from Venezuela dry up -trade, data
Marianna Parraga {} Published 5:46 PM ET Mon, 11 June 2018
HOUSTON, June 11 (Reuters) - The U.S. unit of Venezuela’s state-run oil producer PDVSA is increasing purchases of crude on the open market because it cannot get sufficient deliveries from its struggling parent company, traders said on Monday.
Citgo Petroleum has been buying crude from multiple countries worldwide as PDVSA has been unable to comply with the contractual volume of heavy crude due to falling output and port congestion slowing deliveries, according to the traders.
Declining oil production, lawsuits by creditors, shortages of spare parts for terminals and executive braindrain have all reduced PDVSA’s ability to export oil. Most recently, U.S.-based ConocoPhillips’ actions to seize PDVSA assets to cash in on a $2 billion arbitration award have added to the firm’s export issues.
Crude exports are Venezuela’s main source of revenue, but the OPEC member has seen deliveries fall sharply in the last few months, dropping to 1.17 million barrels per day (bpd) in May from 1.24 million bpd in April, according to Thomson Reuters trade flows data.
Citgo in recent weeks has been buying Colombian and Ecuadorean heavy crude on the spot market, as well as Azeri Light from the Black Sea region and Arab heavy and medium crudes, according to the Reuters data and traders.
China taking a large bite of Venezuela’s output to service outstanding debt?